(2002; 56 pages) [French] [Spanish]
(b) Article 30
Article 30 allows Members to provide for limited exceptions to the exclusive rights conferred by a patent, that is, to define acts that would not be deemed as infringing when made without the authorization of the patent owner. Such exceptions may include, for instance, acts of experimentation and the request for marketing approval of a pharmaceutical product before the expiration of the patent (known as the “Bolar exception”)89.
89 See, e.g., Velasquez and Boulet, 1999.
An Article 30 solution may be more streamlined and easier to implement than an Article 31 (f) solution, since no amendment and parliamentary approval is involved, and the exporting country would not be bound to grant case-by-case compulsory licences.
The solution based on an interpretation of Article 30 avoids two of the three steps mentioned above and the double compensation issue. There is no need to amend the Agreement; the TRIPS Council could simply provide an authoritative interpretation. An amendment to national law in exporting countries would be required (a step that may encounter the same type of difficulties as mentioned above), but once provided, the exception could be invoked without the need to obtain, case-by-case, a compulsory licence from the government of the exporting country. The exception could be invoked at any time, and without time limit, by any third party. Finally, compensation would only be payable under the compulsory licence in the importing country.
An Article 30 solution must overcome possible objections about the consistency of an exports exception with the conditions of Article 3090, which have been narrowly interpreted by a panel in the EC-Canada case91.
90 A possible difficulty is that any interpretation may be read across to other Articles of TRIPS. See IP/C/W/340.
91 WT/DS114/R, 17 March 2000.
The panel provided an interpretation of what “limited” means in Article 30:
“The word “exception” by itself connotes a limited derogation, one that does not undercut the body of rules from which it is made. When a treaty uses the term “limited exception”, the word “limited” must be given a meaning separate from the limitation implicit in the word “exception” itself. The term “limited exception” must therefore be read to connote a narrow exception - one which makes only a small diminution of the rights in question (para. 7.30)
In the absence of other indications, the Panel concluded that it would be justified in reading the text literally, focusing on the extent to which legal rights have been curtailed, rather than the size or extent of the economic impact. In support of this conclusion, the Panel noted that the following two conditions of Article 30 ask more particularly about the economic impact of the exception, and provide two sets of standards by which such impact may be judged The term “limited exceptions” is the only one of the three conditions in Article 30 under which the extent of the curtailment of rights as such is dealt with” (para. 7.31).
The panel also considered what “normal exploitation” means. It argued that:
“The normal practice of exploitation by patent owners, as with owners of any other intellectual property right, is to exclude all forms of competition that could detract significantly from the economic returns anticipated from a patent’s grant of market exclusivity. The specific forms of patent exploitation are not static, of course, for to be effective exploitation must adapt to changing forms of competition due to technological development and the evolution of marketing practices. Protection of all normal exploitation practices is a key element of the policy reflected in all patent laws” (para. 7.55).
Finally, the panel indicated that “legitimate interests” must be “construed as a concept broader than legal interests” (para 7.71), but did not address what “unreasonably” means, since the panel’s analysis led to the conclusion that there was not in the case “conflict” with the normal exploitation of a patent, and therefore it was not necessary to elucidate whether the Canadian exception was reasonable or not. If a conflict of such kind were found, however, the way in which “unreasonably” were to be interpreted would acquire crucial importance and become a delicate issue.
For an interpretation of Article 30 in the context of paragraph 6, see Abbott, 2002b.
It must be noted, however, that the interpretation given by a panel (or the Appellate Body) to a particular provision does not bind Members, who may depart from such interpretation in exercising their “exclusive authority to adopt interpretations” (Article IX.2 of the WTO Agreement). In fact, in adopting the Doha Declaration, Members have established a precedent for reading the exception in Article 30 in a broader way than the panel in the EC-Canada case, whenever public health issues are at stake. In effect, since the TRIPS Agreement is “a part of the wider national and international action” to address public health problems (paragraph 2 of the Doha Declaration), the panels and the Appellate Body should consider the public-health implications of exceptions to the patent owner’s exclusive rights.
An export exception, if circumscribed to situations defined in accordance with paragraph 6, may be reasonably deemed to fall under the three conditions stipulated by Article 30. The exception
• would be “limited” to specified circumstances;
• would “not unreasonably conflict with a normal exploitation of the invention” since, though exportation is a normal mode of exploiting an invention, supplying of a market at low prices by a third party may not conflict with such exploitation (which is normally made in order to obtain the monopolistic rent generated by patent protection);
• would not “unreasonably prejudice the legitimate interests of the patent owner”, to the extent that safeguards are adopted in order to avoid diversion to other markets;
• would positively “take account of the legitimate interests of third parties” (consumers in the importing country)92.
92 Questions may also arise as to whether - given the territoriality of patent grants - the interests of the consumers in a foreign country may be deemed a “legitimate interest” for the purposes of Article 30. Canada held, in this regard, in the EC-Canada case that “[a]s the TRIPS system was designed to be international and so to extend across borders there was no reason why the legitimate interests of the third parties in other countries could not be taken into account when applying a limited exception under Article 30” (para.4.38(d)).