• World Trade Organization (WTO)
• North American Free Trade Agreement (NAFTA)
• Free Trade Area of the Americas (FTAA)
• Regional & Bilateral Initiatives
• Trade in Goods
• Trade in Services
• Investment
• Trade & Environment
• Further Opportunities
• Development and Society
• Dispute Settlement
• Why Trade Matters
• Resource Centre
• It's Your Turn
• Export & Import Controls

Dispute Settlement

WTO Panel Cases to which Canada is a Party

Canada - Patent Protection of Pharmaceutical Products
Case Summary

Submission for Canada

1. In these proceedings, the European Communities and their Member States (hereinafter the EU) contend that two provisions of Canada's Patent Act do not conform with the requirements of the Agreement on Trade-Related Intellectual Property Rights (TRIPS). The provisions in issue stipulate that it is not an infringement of a patent for a person, not having the consent of the patent owner, to make, construct, use or sell the patented invention
   
   
   1. solely for uses reasonably related to the development and submission of information required under any law that regulates the manufacture, construction, use or sale of a product (subsection 55.2(1) of the Patent Act), or
      
      
   2. during a limited, prescribed period immediately preceding the expiry of the patent, for the manufacture and storage of articles intended for sale after the patent expires (subsection 55.2(2) of the Patent Act).
   
   
   
2. The essential question is whether these two provisions are "limited exceptions to the exclusive rights conferred by a patent", within the meaning of Article 30 of TRIPS.
   
   
3. It is Canada's submission that these two measures
   
   
   1. are "limited exceptions" within the meaning of Article 30, since they allow patent owners complete freedom to exploit their rights throughout the full term of patent protection, leaving the monopoly of commercial exploitation and the exclusivity of economic benefits unimpaired for the life of the patent;
      
      
   2. do not conflict with a normal exploitation of a patent or prejudice the legitimate interests of the patent owner, since they only affect the patent owner's commercial exploitation after the patent has expired;
      
      
   3. in any event, take into account Canada's national interest in measures conducive to social welfare and the achievement of a balance between rights and obligations, both of which are recognized objectives in Article 7; and
      
      
   4. in particular, as required by Article 30, take account of the legitimate interests of third parties, in that:
      
      
      1. they allow potential competitors to compete freely with the patentee after the patent expires, consistent with the policy of full competition underlying Article 29's requirement that, in return for the grant of patent protection, patentees must disclose their inventions to the public; Article 33's provision that the exclusive rights be conferred for a specified term only; and Article 40's authorization of national measures to prevent abuse of intellectual property rights having an adverse effect on competition; and
         
         
      2. they seek to protect public health -- a value recognized in Article 8.1 -- through promoting access to cost-effective generic medicines following patent expiry, and in this connection they take into account the legitimate interests of individuals, private insurers and public sector entities that finance health care in maintaining access to affordable medicines.
   
   
   
4. Article 30 allows uses that do not unreasonably conflict with a normal exploitation of the patent or unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties. Canada submits that Article 30 therefore authorizes measures that limit exclusive rights, provided that no commercial exploitation -- i.e., sales -- take place during the patent term. Any other interpretation would:
   
   
   1. ignore the existence of the word "unreasonably" in Article 30 and thereby the fact that conflict with normal exploitation and prejudice to the patent owner's interests are allowed;
      
      
   2. disregard the public policy principles inherent in Articles 29 and 33, which encourage free and open competition with the patent owner immediately upon expiry of the patent; and
      
      
   3. as a consequence, promote the practice of enforcing patent rights within the patent term so as to extend the monopoly of the patent owner beyond the term, a policy which the EU sought to have included in the Agreement but which was not so included, i.e., as the EU makes plain in paragraph 41 of its First Submission, it seeks to win through litigation the windfall period of protection that it could not secure by negotiation.
   
   
   
5. Canada's submission is based on the interpretative rule set out in Article 31 of the Vienna Convention on the Law of Treaties that the terms of any international treaty, including TRIPS, are to be interpreted in good faith in accordance with their ordinary meaning in their context and in light of the object and purpose of the treaty. When the exception provisions in Part II of the TRIPS Agreement are interpreted in accordance with this rule, it becomes apparent that Article 30 provides a general and flexible authority for Members to adopt measures that balance the interests of patent owners with the interests of others, as Article 7 expressly states is an objective of TRIPS.
   
   
6. The language of Article 30 is markedly different from other provisions which allow exceptions to treaty rights. For example, GATT 1994, Article XX, requires -- as in paragraph (b) -- that the exception measures be necessary to protect human health, and it contains additional restrictions in its chapeau portion. No similar restrictions are required under Article 30. Similarly, TRIPS Article 13 (and Article 9(2) of the Berne Convention for the Protection of Literary and Artistic Works (1971), upon which the latter was modelled), does not allow conflict with a normal exploitation of the work.
   
   
7. Thus, TRIPS contemplates that Members may, in implementing their obligations within their legal systems, adopt measures which, like those in issue here, introduce limited exceptions to the exclusive rights conferred by a patent and confine the patent monopoly to the specific term for which it is granted, in the interests of promoting full competition in regulated-product markets after the expiry of that term and of realizing the cost-saving benefits that competition in those markets (particularly the health care products market) confers on society. TRIPS does not contemplate that these important societal interests should be overridden by an alleged right of patentees to exploit time-consuming regulatory review systems -- which are neither designed nor intended to protect intellectual property rights -- in order to extend the term of patent protection and to gain a windfall monopoly.
   
   
8. Equally, TRIPS does not contemplate that these important societal interests should be overridden by the anti-discrimination requirement of Article 27.1. The latter provision is not intended to require "across the board" derogations from patent rights. That would only defeat Article 30's purpose of permitting exceptions that are "limited", and would compel the application of exceptions where they are not needed. Instead, since Article 27.1 does not purport to define the "patent rights" that it requires to be made available and enjoyable without discrimination, those rights are the ones enumerated in Article 28.1, subject to any exception that may be made under Article 30, 31 or 40. This interpretation gives effect to the language of Article 27.1 in its context rather than in isolation, and achieves the balance contemplated by Article 7 as an objective of the TRIPS Agreement.