IBT – Problem 9.3 TRIPS and Pharmaceutical Victor H. Bouganim WCL, American University

Victor H. Bouganim, WCL, American University, Spring 2001 TRIPS and Pharmaceutical Problem 9.3, Textbook, p I Fizzer, Inc. F Big US multinational pharmaceutical company F Extensive research and development budget and staff. Developed the following drugs - –TETRACINE u Powerful antibiotic u Patent obtained wherever possible –ANTIAIDS u Immunizes most humans from the AIDS virus u Patent obtained wherever possible

Victor H. Bouganim, WCL, American University, Spring 2001 The Government of Thailand F Until recently, there was an express exclusion of patent coverage for pharmaceuticals F Recently allowed drugs patents in response to international pressure, subject to “ Compulsory Licensing ” provision F Rapidly rising rate of AIDS infections constitutes a public emergency F Want to compel licensing by FIZZER of its ANTIAIDS patent to local pharmaceutical companies TRIPS and Pharmaceutical Problem 9.3, Textbook, p II

Victor H. Bouganim, WCL, American University, Spring 2001 Patent Protection F Patents are granted to inventors according to national law F Patents represent territorial grants of exclusive rights F Each jurisdiction provides varying patent protections –Example – many developing nations refuse to grant patents on pharmaceuticals –Countries like Thailand have unlicensed “generics” industries

Victor H. Bouganim, WCL, American University, Spring 2001 F Any person who invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent. F The invention must meet the following requirements to be patentable:  Patentable subject matter  Useful  Novelty  Non-obvious Patentable Invention Inventive Step Not obvious from the current St ate of the Art

Victor H. Bouganim, WCL, American University, Spring 2001 Patents - Basic Rules F A patent for an invention is the grant of a property right to the inventor, issued by the Patent and Trademark Office (PTO). F The term of a new patent is 20 years from the filing date in the PTO, or in special cases, from the date of an earlier related application. - First to File v. First to Invent. F US patent grants are effective only within the US, US territories, and US possessions. F Patent rights exclude everyone from making, selling or using the patented invention without the permission of the patentee.

Victor H. Bouganim, WCL, American University, Spring 2001 Patent Systems F Registration –France uses the “registration” system –Patent is issued without an investigation into the patentability of the invention –Validity of the patent is difficult to evaluate until the patent is challenged F Examination –U.S. and Germany use the “examination” system –Patent grant is made following a careful examination of statutory criteria –Must demonstrate to the U.S. Patent Office that the invention is novel, useful and non-obvious

Victor H. Bouganim, WCL, American University, Spring 2001 International Patent Regime F TRIPS, Art –Reference to the Paris Convention [TRIPS, Art. 2] F Paris Convention, 1883 as amended in F Patent Cooperation Treaty, F European Patent Convention –Designed to permit a single office at Munich and The Hague to issue patents of all countries party to the treaty F European Union Patent Convention –Designed to create a single patent valid throughout the EU

Victor H. Bouganim, WCL, American University, Spring 2001 Paris Convention - Overview Paris Convention - Overview F 160 States are members (The Paris Union), including: EU, USA and Japan (as in January 2001) F Concluded in Amended and revised several times, last in F Governed by WIPO - World Intellectual Property Organization F Subject matters covered: –Patents and Utility Models –Trademarks, Service and Collective Marks –Industrial Designs –Trade Names and Geographical Indications –Unfair Competition

Victor H. Bouganim, WCL, American University, Spring 2001 Paris Convention - Principles F National Treatment F Right of Priority F Common Rules

Victor H. Bouganim, WCL, American University, Spring 2001 PCT - Patent Cooperation Treaty F Established in 1970, Amended in 1979, modified F Open to members of the Paris Union. F Facilitates international patent search and registration.

Victor H. Bouganim, WCL, American University, Spring 2001 Patent Conventions F Paris Convention –“right of national treatment” –“rights of priority” patent applications in foreign jurisdictions are not dependent upon success in home country –Does not reduce the need for individual patent applications F Patent Cooperation Treaty (PCT) –40 countries including U.S. –Designed for greater uniformity and less cost in the international patent filing process –Filings can be done in selected countries instead of in each individual country –International Searching Authorities (ISA) –Allows applicant to have an international preliminary examination

Victor H. Bouganim, WCL, American University, Spring 2001 TRIPS Implementation TRIPS, Art F I Jan General implementation date. F Developing countries and countries in the process of transformation from centrally-planned to free market economies are entitled to delay implementation for a period of 4 years. –I.e. latest implementation date is 1 Jan F Least developed countries can delay implementation for 10 years.

Victor H. Bouganim, WCL, American University, Spring 2001 TRIPS - Patent Implementation F To the extent that a developing country Member is obliged by this Agreement to extend product patent protection to areas of technology not so protectable in its territory on the general date of application of this Agreement for that Member, as defined in paragraph 2, it may delay the application of the provisions on product patents of Section 5 of Part II to such areas of technology for an additional period of five years. F TRIPS, Art. 65.4

Victor H. Bouganim, WCL, American University, Spring 2001 TRIPS General Principle TRIPS, Art. 8.1 F Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio- economic and technological development, provided that such measures are consistent with the provisions of this Agreement.

Victor H. Bouganim, WCL, American University, Spring 2001 Patents - Exclusions F Members may exclude from patentability inventions … necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment … F TRIPS, Art F Members may also exclude from patentability: F (a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals; F (b) plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals … F TRIPS, Art. 27.3

Victor H. Bouganim, WCL, American University, Spring 2001 Drugs & Health Patents F North v. South debate: Do drug patents unfairly keep needed medications out of the hands of indigent populations? F Should the duration of patent protection be reduced for prescription drugs, so more affordable generic versions can be produced in less than 20 years? F Should health procedures, e.g., a surgical technique be patentable? F What is the relationship between drug patents and the health and well-being of individuals?

Victor H. Bouganim, WCL, American University, Spring 2001 Class Discussion F Should patents on drugs receive the same protection in developing countries? F South African AIDS drugs example –The Pharmaceutical Manufacturers' Association (PMA) challenged the Medicines and Related Substances Control Amendment Act in a bid to stop the South African government from making cheaper generic drugs available.

Victor H. Bouganim, WCL, American University, Spring 2001 Patents - Compulsory Licensing F Article 31 of the TRIPS sets outs the framework for national laws on use without authorization of the patent owner. F Article 31 gives countries broad discretion on government use of compulsory licensing. –For example, there are no limitations on the grounds upon which a government can authorize use of a patent by third parties, only a set of procedures to follow.

Victor H. Bouganim, WCL, American University, Spring 2001 Compulsory Licensing TRIPS Rules - 1 F Governments consider cases on their individual merits F Prior to authorizing third party use, there should be an effort to negotiate a voluntary license on reasonable commercial terms F Government must provide for "adequate remuneration... taking into account the economic value of the authorization."

Victor H. Bouganim, WCL, American University, Spring 2001 Compulsory Licensing TRIPS Rules - 2 F ”Use shall be authorized predominantly for the supply of the domestic market." [ TRIPS, Art. 31(f)] F There are many exceptions to the general rules. [ TRIPS, Art. 31] –For example, the requirements for negotiation for a voluntary license on reasonable commercial terms may be waived: u in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use.

Victor H. Bouganim, WCL, American University, Spring 2001 TRIPS and Pharmaceutical Problem 9.3 Analysis - I F Could Thailand revert to its former policy of no pharmaceutical patents? u See TRIPS Art. 8 & 27. F Is the Thai law providing for compulsory licensing permissible under TRIPS? u See TRIPS Art. 27(1). F On what grounds might Thailand argue that its compulsory licensing of ANTIAIDS is justifiable under TRIPS? u See TRIPS Art. 30 & 31.

Victor H. Bouganim, WCL, American University, Spring 2001 TRIPS and Pharmaceutical Problem 9.3 Analysis - II F Thai pharmaceutical industry –Currently manufactures and exports generic versions of FIZZER’s drugs –US has imported Thai versions of ANTIAIDS and TETRACINE F Can the Thai government compel FIZZER to license the ANTIAIDS patent to local pharmaceutical companies under the TRIPS agreement?

Victor H. Bouganim, WCL, American University, Spring 2001 TRIPS and Pharmaceutical Problem 9.3 Analysis - III F FIZZER filed a complaint with the U.S. International Trade Commission (ITC) under section 337 of the Tariff Act of 1930 –Requested preliminary and permanent relief from Thai generic drug imports F Will FIZZER be successful in excluding Thai generic drugs from the U.S. market?

Victor H. Bouganim, WCL, American University, Spring 2001 Section 337 Tariff Act 1930 [Mats, p. 466] F Sec deals with “Unfair Practices in Import Trade” –Authorizes the International Trade Commission (ITR) to investigate alleged violations. –ITR may provide remedies, including exclusion of imported articles from entry into the USA. F Most of section 337 investigations involved intellectual property rights –From 1974 to about 95% of all investigations –Amended in 1988 to include explicitly jurisdiction over importation of articles which infringe IP rights.

Victor H. Bouganim, WCL, American University, Spring 2001 Section 337 Investigations F IP Issues, which are determined in the investigation –Validity –Enforceability –Infringement –A minimal US presence –Public interest –Remedy F Injury –No injury requirement for intellectual property investigations F Industry –Domestic Industry requirement - Minimal –Actual production of the article in the US is not required F Detailed procedures, review and referral to President

Victor H. Bouganim, WCL, American University, Spring 2001 TRIPS and Pharmaceutical Problem 9.3 Analysis - IV F FIZZER filed a formal complaint with USTR under section 301. F Is FIZZER likely to be successful in stopping the unauthorized production or compulsory licensing of its drugs in Thailand through section 301?

Victor H. Bouganim, WCL, American University, Spring 2001 “Special 301” Sec. 182, Trade Act 1974 [Mats, p. 630] F Under the Special 301 provisions US Trade Representative (USTR) identified trading partners that deny adequate and effective protection of intellectual property or deny fair and equitable market access to United States artists and industries that rely upon intellectual property protection. F USTR conducts an annual review and publishes a report.

Victor H. Bouganim, WCL, American University, Spring 2001 Special Report F Examined in detail the adequacy and effectiveness of intellectual property protection in over 70 countries and found non-compliance in 59 countries. –Initiation of WTO dispute settlement consultations [e.g. Brazil] –Priority Foreign Country [e.g. Ukraine] –Section 306 monitoring [e.g. China] –Priority Watch List [e.g. EU, Russia] –Watch List [39 countries]

Victor H. Bouganim, WCL, American University, Spring 2001 “Special 301” and TRIPS F Monitoring IP rights by the USTR serves as a persuasive device to reform IP laws, through negotiations with foreign governments. F Economic sanctions may be imposed in extreme cases. F IP monitoring by the USTR goes beyond TRIPS, and is also applicable to non WTO members. F Does “Special 301” violate WTO principles and objectives?