In order to describe the provisions of the TRIPs Agreement which relate to the standards of patent protection it is useful to recall some of its basic features:
• It is an integral part of the Agreement Establishing the World Trade Organization, and therefore subject to the WTO dispute settlement system;
• It covers not only patents but all other main areas of intellectual property rights;
• It lays down not only the minimum standards of intellectual property protection, but also the procedures and remedies that should be available for effective enforcement.
The basic balance in the TRIPs Agreement
Finding a balance in the protection of intellectual property between the short-term interests in maximizing access and the long-term interests in promoting creativity and innovation is not always easy. Doing so at the international level is even more difficult than at the national level. Especially with regard to pharmaceutical patents, tension between the need to provide incentives for research and development into new drugs and the need to make existing drugs as available as possible can be acute.
The TRIPs Agreement attempts to find an appropriate balance. Its Article 7 (“objectives”) recognizes that the protection of intellectual property should contribute to the promotion of technological innovation, to the transfer of technology, and to a balance of rights and obligations. The Agreement emerged from a negotiating process where the need for balance was very much to the fore. This will be illustrated below.
Patentability of pharmaceutical inventions
The main rule relating to patentability is that patents shall be available for any invention, whether a product or a process, in all fields of technology, provided the invention meets the standard criteria for patentability - namely, novelty, inventive step and industrial applicability. In addition, countries are required to make the grant of a patent dependent on adequate disclosure of the invention and they may require information on the best mode for carrying it out. Disclosure is crucial, since it makes important technical information publicly available so that others may use it for advancing technology in the area, even during the patent term, and it ensures that, after the expiry of the patent term, the invention truly falls into the public domain.
Three types of exception to the above rule on patentable subject-matter are allowed; these exceptions may be of interest from a public health perspective:
• Inventions the prevention of whose commercial exploitation is necessary to protect ordre public or morality, including to protect animal or plant life or health;
• Diagnostic, therapeutic and surgical methods for the treatment of humans or animals; and
• Certain plant and animal inventions.
The rights conferred and the term of protection
According to TRIPs, the minimum rights that must be conferred by a patent follow closely those that were found in most patent laws, namely the right of the patent owner to prevent unauthorized persons from using the patented process and making, using, offering for sale, or importing8 the patented product or a product obtained directly by the patented process.
8 “Importing” is subject to the provisions of TRIPs Article 6; see paragraph 3.4 and annex C.
Under the TRIPs Agreement, protection must last for at least 20 years from the date of filing of the patent application. The WTO Panel in “Canada - Term of Patent Protection” recently found that this rule applied not only to new patents but also to patents in force at the end of a Member country’s transition period9.
9 The Panel Report was circulated to WTO Members in May 2000 but is not yet adopted (Canada has since appealed).
It should be noted that, although the issue of patent term extension to compensate for regulatory delays in the marketing of new pharmaceutical products was raised in the Uruguay Round negotiations, the TRIPs Agreement does not contain an obligation to introduce such extension.10
10 The effective period of patent protection for inventions of new chemical entities is much less than the full 20 years, because part of that period will have expired before marketing approval is obtained from the public health regulatory bodies. For this reason, most of the major developed countries have introduced systems whereby a prolonged period of protection can be obtained to compensate, at least in part, for this loss of the effective period of protection.
Limitations/exceptions to these rights
Under the TRIPs Agreement, patent rights are not absolute but can be subject to the following limitations or exceptions:
• Countries may make limited exceptions, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking into account the legitimate interests of third parties. Thus, for example, many countries allow third parties to use a patented invention for research purposes where the aim is to understand more fully the invention as a basis for advancing science and technology. The Bolar provision (see par. 3.5) is another example of an exception.
• Countries may authorize the use by third parties (compulsory licenses) or for public non-commercial purposes (government use) without the authorization of the patent owner. Unlike what was sought by some countries in the negotiations, the grounds on which this can be done are not limited by the Agreement, but the Agreement contains a number of conditions that have to be met in order to safeguard the legitimate interests of the patent owner (see Article 31). Two of the main conditions are that, as a general rule, an effort must first have been made to obtain a voluntary license on reasonable commercial terms and that adequate remuneration shall be paid to the right holders.
• Countries have the right to take measures, consistent with TRIPs provisions, against anti-competitive practices. When a practice has been determined after due process of law, to be anti-competitive, the conditions for issuing compulsory licenses are more flexible. For example, the two conditions specifically referred to above (regarding voluntary license and remuneration) may be relaxed. The Agreement also provides for consultation and cooperation between Member Countries in taking actions against anti-competitive practices.
Other policy instruments
It should be remembered that governments may use public policy measures outside the field of intellectual property to address issues of access to and prices of drugs. For example, many countries use price or reimbursement controls. The TRIPs Agreement makes it clear that WTO Members may, in formulating or amending their rules and regulations, adopt measures necessary to protect public health and nutrition, provided that such measures are consistent with the provisions of the Agreement.
The TRIPs Agreement lays down some rather complicated transition provisions which give countries periods of time to adapt their legislation and practices to their TRIPs obligations; these periods differ according to the type of obligation and the stage of development of the country concerned. With regard to the protection of pharmaceutical inventions, there are two situations. The basic rule is that developing countries have until the 1st January 2000 and least developed countries until 1st January 2006 to meet their obligations.
A small number of developing countries, which did not grant patent protection for pharmaceutical products, have until 1st January 2005 to introduce such protection. However, from 1 January 1995, they have to provide a system where applications for pharmaceutical product patents can be filed (often referred to as a “mailbox” system). These applications do not have to be granted until after 1st January 2005. If found to be patentable by reference to their filing (or priority) date, a patent would have to be granted for the remainder of the patent term counted from the date of filing. In the event that a pharmaceutical product that is the subject of a “mailbox” application obtains marketing approval prior to the decision on the grant of a patent, an exclusive marketing right of up to five years will have to be granted provided that certain conditions are met.
TRIPs in context
Most developing and least developed countries already grant patent protection for pharmaceutical products. In these countries, the TRIPs Agreement will therefore not lead to fundamental changes, although a certain amount of adjustment in legislation, for example in respect of patent term and compulsory licensing, may be necessary. With respect to the fairly limited number of countries that did not provide patent protection for pharmaceutical products at the time of entry into force of the WTO Agreement, some, including Brazil and Argentina, have decided to provide such protection more quickly than is required under the TRIPs Agreement.
The TRIPs Agreement pays considerable attention to the need to find an appropriate balance between the interest of rights holders and users; this was an important theme in the negotiations. This is not only reflected in the basic underlying balance related to disclosure and providing an incentive for R&D, but also in the limitations and exceptions to rights that are permitted and in the transition provisions. Whether this balance has always been found in the right place is a question for discussion among WTO Members.
The protection of pharmaceutical inventions is one aspect of much wider negotiations, covering not only the protection of intellectual property in general in a coherent and non-discriminatory way but also further liberalization and strengthening of the multilateral trading system as a whole. While it is true that some countries put particular emphasis on TRIPs matters in the Uruguay Round negotiations, it is also true that other countries attached great importance to other areas, for example textiles and agriculture. A strong and vibrant multilateral trading system is believed to be essential for creating conditions for economic growth and development worldwide. This, in turn, will generate the resources required to tackle health problems.