Doha Declaration on TRIPS and Public Health: Sub-paragraph 5 (d)
5. Accordingly and in the light of paragraph 4 above, while maintaining our commitments in the TRIPS Agreement, we recognize that these flexibilities include: ...
d. The effect of the provisions in the TRIPS Agreement that are relevant to the exhaustion of intellectual property rights is to leave each member free to establish its own regime for such exhaustion without challenge, subject to the MFN and national treatment provisions of Articles 3 and 4.
The authorization of parallel imports under an international principle of exhaustion has also been regarded by developing countries as a key component of a patent system sensitive to public health needs. This was one of the key issues raised by pharmaceutical companies against South Africa in the already mentioned case54.
54 See, e.g. Bond, 1999.
Developing countries were keen to clarify in the Doha Declaration the Members’ right to adopt an international principle of exhaustion of rights55, in accordance with article 6 of the Agreement. Paragraph 5 (d) provides the sought-after clarification. It specifically states that “the effect of the provisions in the TRIPS Agreement... is to leave each Member free to establish its own regime for such exhaustion without challenge” (emphasis added).
55 This principle permits the import of a patented product into a country without the authorization of the title holder or his licencees, to the extent that the product has been put on the market elsewhere in a legitimate manner. See, e.g., Velásquez and Boulet, 1999.
Though this paragraph does not add substantively to the TRIPS Agreement, it certainly reassures Members wishing to apply an international exhaustion principle that it would be legitimate and fully consistent with the Agreement to do so.
It is necessary to stress that in order to take advantage of this and other flexibilities allowed by the TRIPS Agreement - and confirmed by the Doha Declaration - national laws must incorporate the appropriate rules in the form of compulsory licences, exceptions and other relevant provisions. Such flexibilities do not automatically translate themselves into national regimes, and do not protect governments (or private parties) from legal actions based on national laws and regulations that fail to make use of the TRIPS Agreement’s flexibilities. For example, specific legal provisions allowing for parallel imports would be normally necessary in order to benefit from the principle of international exhaustion of rights56.
56 Though in some countries this principle may result from jurisprudential elaboration, it may take a long time to test what the legal solution is. The ensuing uncertainty is likely to discourage or effectively prevent the use of such a mechanism as a means to obtain medicines at lower prices than those domestically available.
A survey of patent laws in developing countries shows that many of such countries have not or only partially used the flexibilities allowed by the TRIPS Agreement57. The effective implementation of the Doha Declaration in those countries, therefore, would call for an amendment to national laws so as to incorporate the exceptions and safeguards necessary to protect public health58.
57 See Thorpe, 2002.
58 For possible options for such a reform, see, e.g. Correa, 2000c.