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1 IP/C/W/340Page 1 WORLD TRADE ORGANIZATION Council for Trade-Related Aspects of Intellectual Property Rights IP/C/W/ March 2002 ( ) Original: English PARAGRAPH 6 OF THE DOHA DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC HEALTH Communication from the United States The Secretariat has received from the Permanent Mission of the United States a copy of the following communication dated 8 March 2002, with the request that it be circulated as an unrestricted document. We are committed to helping countries that are experiencing public health crises. We want to find a real solution to problems that prevent Members from being able to address health problems associated with access to pharmaceuticals. We want all Members to be able to use the full flexibility of the TRIPS Agreement to help provide their citizens access to affordable medicines in times of crises. We note that the Doha TRIPS declaration recognizes that the exclusive rights provided by patents are an important incentive to development of new drugs. Patents provide market incentives for innovators to risk time, energy and resources to develop and bring to market new technology. A system of patent rights and enforcement of those rights for pharmaceuticals provides numerous benefits to society; the availability of exclusive patent rights for pharmaceutical products spurs research and development of new medicines, including those resulting from biotechnology, to treat and cure diseases. The TRIPS Agreement recognizes that compelling innovators to relinquish patent exclusivity is a limited remedy for special circumstances. Clearly, under TRIPS, compulsory licences are appropriate, but it must be borne in mind that these are exceptions, rather than the norm. The TRIPS Agreement allows Members to use compulsory licences, if they wish, to help address supply problems that can arise during health crises. The Agreement establishes conditions for the use of compulsory licences that ensure these licences will be limited and carefully drawn. The Agreement also recognizes that time is of the essence in a national emergency or other circumstances of extreme urgency by waiving the requirement to seek first a voluntary licence from the patent owner. In paragraph 6 of the Doha Ministerial Declaration on the TRIPS Agreement and Public Health, Ministers recognized that certain WTO Members, those with "insufficient or no manufacturing capacities in the pharmaceutical sector," could have difficulty using the compulsory licensing provisions of the TRIPS Agreement. The TRIPS Council is instructed to find an expeditious solution to this potential problem and report to the General Council before the end of 2002.

2 IP/C/W/340Page 2 Obviously, many factors must be addressed in helping countries with limited means address public health problems. Among these factors are issues of infrastructure, financing, elimination of impediments such as tariffs and internal taxes, training, etc., most of which must be addressed in other appropriate fora. In addition, all countries must recognize that there are many people in the world who are unable to afford needed medicines at any price and under any TRIPS-related solution there would still involve a cost. 1 It is for those who cannot afford needed medicines that the Global Fund is essential and we encourage all countries that can to contribute to that fund and for those countries that can benefit from the fund to avail themselves of it. CONSIDERATIONS FOR DEVELOPING AN EXPEDITIOUS SOLUTION It must be kept in mind, when considering particular TRIPS provisions related to patents, as is the case here, that TRIPS obligations exist only when a patent exists. If an innovator has chosen not to obtain rights for a pharmaceutical invention in a particular market, if a country does not currently provide patent protection for pharmaceutical products, 2 or if the patent on a particular medicine in that market has expired, 3 anyone may make, use, offer for sale, sell the product in that market, or import the product involved into the market, or use the process. They also may produce the product for export. The Council should, in carrying out its work under paragraph 6, develop information regarding where patents exist currently on pharmaceuticals to treat the diseases cited in the Declaration afflicting poor countries that lack or have insufficient manufacturing capacities in the pharmaceutical sector. This information will provide Members with an idea of the scope of the potential problem and help us formulate a practical solution. We note that there are developing countries (i.e., those taking advantage of the Article 65.4, that possess the technological capability to manufacture pharmaceuticals and are not, and will not be, subject to Article 31(f) TRIPS requirements until In the event a patent exists on a needed pharmaceutical in the territory of a Member that lacks or has insufficient manufacturing capacities, that Member may grant a compulsory licence to 1 See discussion on access to medicine in Macroeconomics and Health: Investing in Health and Economic Development, Report of the Commission on Macroeconomics and Health, 20 December 2001, chaired by Jeffrey D. Sachs: "The poor lack access to essential medicines for many reasons, all of which must be addressed in a comprehensive manner. The most important reason, by far, is poverty itself-in the absence of large-scale donor support, poor countries in sub-saharan Africa with high HIV/AIDS prevalence have been unable to avail themselves, at any significant scale, of these lower prices. The same problems are observed in the access to TB drugs, even those that are off patent, as well as many vaccines that are off patent yet still too expensive for use in the low-income countries in the absence of adequate donor financing." 2 As is the case currently with India and a number of other developing and least developed countries. Developing countries availing themselves of the transition period permitted under Article 65.4 will not be obliged to provide patent protection for pharmaceutical products until Either because the term has ended or because the patentee has not paid the maintenance fees.

3 IP/C/W/340Page 3 import and distribute foreign-manufactured product on its local market, including from the developing countries currently taking advantage of the provisions of Article The expeditious solution the TRIPS Council must devise, therefore, will apply for the most part to situations arising no earlier than 1 January Obviously, even if a patent existed in a country that lacked or had insufficient capacities for manufacture in the pharmaceutical sector, the country would have no need for compulsory licensing if the patentee is supplying the market in sufficient quantities at prices equal to or lower than the cost of drugs obtained using a compulsory licence. 4 Similarly, if there is no patent in force in the country in need, the country would have no need to employ the solution if generic pharmaceuticals were available. Whenever possible, the country ought first, before granting a compulsory licence, seek accommodation from the patent owner in order to be assured of a supply of quality product. Paragraph 1 of the Ministerial Declaration on the TRIPS Agreement and Public Health makes clear that Ministers were addressing "public health problems," with special reference to "those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics." The Ministers' direction in paragraph 6, to seek an expeditious solution to potential problems, is limited to the pharmaceutical sector. The significance of discussions relating to modifying the TRIPS Agreement, thereby altering the equilibrium of concessions arrived at under the Uruguay Round, should not be discounted. Therefore, the Council should focus on fashioning a solution to improve access to pharmaceuticals to treat diseases referred to in the Declaration, such as HIV/AIDS, malaria, tuberculosis and other epidemics. The phrase "with insufficient or no manufacturing capacities in the pharmaceutical sector" will have to be analyzed in connection with any solution. We do not believe it is appropriate to extend this solution to developed countries or to countries that choose not to manufacture certain drugs based on policy, economic or other reasons. This solution should reach out to those poor countries that are truly not capable of manufacturing sufficient supplies of needed pharmaceuticals. In this connection, we think it would be helpful for more information to be gathered for consideration by the Council with respect to current levels of pharmaceutical manufacturing capacity worldwide such as the work already done by the United Nations Industrial Development Organization. In summary, we reiterate our firm belief that the application of an expeditious solution to access to pharmaceuticals should be applied to address diseases referred to in the Declaration, such as HIV/AIDS, malaria, tuberculosis and other epidemics in poor countries that lack sufficient pharmaceutical manufacturing capacities. One further question to consider is whether it would be appropriate for this solution to be employed by entities other than government or other non-commercial actors, (e.g., commercial entities for profit). Given that we are trying to address situations where access to pharmaceuticals is required so that governments and other non-commercial actors can address major health problems afflicting their populations, we seriously question whether there are any circumstances under which this solution should employed by commercial entities on a for-profit basis. SAFEGUARDS TO ENSURE THAT THE SOLUTION IS EFFECTIVE In order to ensure that an expeditious solution is effective in addressing the situation identified in paragraph 6 of the Ministerial Declaration on the TRIPS Agreement and Public Health, the TRIPS Council will 4 We note that a component of the overall price of a drug obtained pursuant to a compulsory licence will be an amount associated with the required payment of adequate remuneration to the right holder.

4 IP/C/W/340Page 4 need to monitor the application of the solution in each case, and the results are achieved. Any solution devised should, therefore, include a means for informing the Council when the solution is being employed and for providing ongoing information regarding the nature and quantity of pharmaceuticals being exported to a Member, the numbers of people benefiting from the solution, and the results achieved, and any evidence of diversion of products authorized for production under the solution. We believe that the TRIPS Council must develop, as part of any solution, a commitment by all Members to take the necessary steps to prevent diversion of the relevant pharmaceuticals. Likewise, the entire output of the relevant pharmaceuticals manufactured subject to the compulsory licence should be exported to the Member in need. Whenever a particular pharmaceutical or pharmaceuticals are being supplied to a Member through application of the solution devised by the TRIPS Council, all Members should have an obligation to ensure that the medicines in question are not diverted from the Member's citizens for whom they were intended into other countries. The submission of information mentioned earlier would alert all WTO Members of the particular medicines involved, their source and destination, and the quantities involved, thereby enabling the Members to take appropriate steps to prevent diversion into their markets. It should be noted as well, that notification of the right holder as provided in Article 31(b) will aid in ensuring that action is taken with respect to any diversion to markets in which patents exist. PROPOSALS TO DATE In carrying out the task assigned by Ministers in paragraph 6 of the Declaration, the Council should seek the solution least prejudicial to balance of rights and obligations negotiated during the Uruguay Round. Absent such an approach, it will be difficult to achieve agreement in future rounds of multilateral trade negotiations, since Members will not be able to have confidence that rights and obligations will be respected. Article 30 One suggestion made prior to Doha involved an interpretation of Article 30 to include a limited exception to patent rights for export of medicines to countries lacking or having insufficient manufacturing capacities in the pharmaceutical sector. Article 30 authorizes limited exceptions to patent rights, for such things as research exemptions, prior user rights, pre-expiration testing, so long as those 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 account of the legitimate interests of third parties. The limited exceptions to patent rights authorized by Article 30 do not require a government decision in each case. Article 30 contains no requirements for notifying a patent owner of use, for establishing particular terms and conditions, for expiration if circumstances change, or for remuneration to the patent holder. We believe that an interpretation of Article 30 to allow exceptions to patent rights to permit otherwise infringing acts to supply a patented pharmaceutical for purposes of export would seriously prejudice the rights and obligations of Members under the TRIPS Agreement. Article 31 Another proposal that has been discussed calls for interpretation or amendment of Article 31 (f) in order to permit a Member to grant a compulsory licence under an existing patent to a local manufacturer for purposes of export to a Member that lacks or has insufficient manufacturing capacities in the pharmaceutical sector. Because Article 31 already establishes agreed terms and conditions for compulsory licensing to ensure balance in situations in which use is permitted without authorization of the patent owner, consideration of solutions based on Article 31 as a whole have merit.

5 IP/C/W/340Page 5 For example, Article 31 requires that decisions on compulsory licensing be made case by case; that, except in cases of national emergency or other urgent circumstance, or of government non-commercial use, the potential licensee attempt first to negotiate a voluntary with the patentee; that the compulsory licence be non-exclusive; that the licence spell out the term and conditions; that when those conditions cease, the licence expires; that the patentee be paid "adequate remuneration" in the circumstances of each case, taking into account the economic value of the authorization. One approach to examine in considering a solution based on Article 31 would be for Members to agree to a moratorium on dispute settlement in instances in which a Member grants a compulsory licence, under circumstances clearly delineated by this Council, for purposes of export to a poor country that lacks or has insufficient manufacturing capacities in the pharmaceutical sector. Such an agreement would not require amendment of the TRIPS Agreement and application of the solution could be overseen by the TRIPS Council, including to insure that medicine being supplied to a Member that lacks or has insufficient manufacturing capacity is not diverted into other markets, away from the people it is intended to help. It is worth considering whether such a solution would not in fact be the most expeditious and least prejudicial to the rights and obligations of Members under the Agreement.

6 WORLD TRADE ORGANIZATION Council for Trade-Related Aspects of Intellectual Property Rights IP/C/W/358 9 July 2002 ( ) Original: English PARAGRAPH 6 OF THE DOHA DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC HEALTH Second Communication from the United States The following is the text of a second communication which was received from the Permanent Mission of the United States on 25 June 2002, and which was circulated as an advance copy for the Council's meeting of June I. INTRODUCTION 1. We are fully committed to helping countries that are experiencing public health crises find real and comprehensive solutions to these situations. As one element of this effort, we support WTO Members' use of the full flexibility of the TRIPS Agreement to help provide their citizens access to affordable medicines to address these urgent situations. 2. As tangible evidence of our commitment, we are today making a second substantive contribution to the dialogue in TRIPS Council aimed at fulfilling the mandate set out in paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health. In our March 14 paper we set out a number of possible solutions to the situation identified in paragraph 6. In this paper we are adding greater specificity to the ideas we tabled in March with the goal of meeting the mandate set forth in the Declaration that the TRIPS Council find an expeditious solution to this problem and to report to the General Council before the end of We are encouraged by the substantive contributions of other Members toward this common goal and appreciate the communication and cooperation we have had with Members as we developed this second paper. We are heartened that there appears to be an emerging consensus among WTO Members on some of the key elements of a solution, including some we identified as having particular merit in our March communication. While not all issues have been resolved, given the constructive approach taken by many Members we do not see any reason why we should not be successful in finding an expeditious solution by the end of the year. We would be greatly concerned by any suggestion that Members accept that this deadline not be met. 4. In this paper we set forth the fundamental aspects of an expeditious, workable, transparent, sustainable and legally certain solution. II. NATURE OF THE PROBLEM 5. At Doha Ministers acknowledged the grave public health problems afflicting Africa and other developing and least developed countries, especially those resulting from HIV/AIDS, malaria, tuberculosis, and other epidemics.

7 IP/C/W/358 Page 2 6. Paragraph 6 of the Doha Ministerial Declaration on the TRIPS Agreement and Public Health recognizes that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement in order to address these health problems. 7. The situations in which this difficulty might occur and where a TRIPS-based solution might be necessary are likely to be limited. However, given the grave health problems faced by certain developing and least-developing countries we recognize that the consequences could be serious for those encountering the problem. First, difficulty would be expected to arise only in situations where the supply of the pharmaceutical in question has not been provided by the patent holder through normal commercial arrangements or through discount, donation, or other aid programs. A TRIPSbased solution can also only be expected to be effective where Members have, or are provided, the resources necessary to procure pharmaceuticals under the terms of a TRIPS-consistent compulsory licence, which includes the provision of adequate remuneration to the patent holder. 8. In addition, if no patents exist on the needed pharmaceuticals in the Member's territory, that country does not need to grant compulsory licences in order to obtain those pharmaceuticals in its market. If patents do exist, the Member already has flexibility under the TRIPS Agreement to grant compulsory licences. Further, WTO Members are free under a compulsory licence to import the product from a manufacturer in another country so long as there is no patent on the pharmaceutical in question in that other country. Should there be a patent in the other country a compulsory licence would also need to be issued in that country before medicines could be exported. However, we note that there are developing countries that possess the technological capability to manufacture pharmaceuticals, which are not obligated to provide pharmaceutical patent protection until The expeditious solution the TRIPS Council must devise, therefore, will apply to situations arising no earlier than 1 January Difficulties could arise, therefore, when a country with insufficient domestic manufacturing capacity and experiencing grave health problems seeks to import a needed pharmaceutical from a manufacturer in a WTO Member where a patent exists on that pharmaceutical. In this situation, it currently would be inconsistent with Article 31(f) for that WTO Member to grant a compulsory licence to its manufacturer to produce the drug solely for export to the country that has insufficient or no manufacturing capacities in the pharmaceutical sector. It is this situation that the TRIPS Council must address. Members have suggested addressing this situation through a moratorium, waiver, amendment, or interpretation. III. SCOPE OF THE SOLUTION AS SET FORTH IN THE DOHA DECLARATION 10. Paragraph 1 of the Doha Declaration on the TRIPS Agreement and Public Health makes it clear that the public health problems addressed by the Declaration are those gravely afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics. Therefore, in establishing the scope of the problems to which the solution should address itself, we encourage Members to reaffirm the Doha Declaration by again: Recognizing the gravity of the public health problems afflicting many developing and leastdeveloped countries, especially those resulting from HIV/AIDS, malaria, tuberculosis and other epidemics; 11. It is clear that the expeditious solution called for in Paragraph 6 of the Declaration is intended to benefit those developing and least-developed country Members that have insufficient or no manufacturing capacities in the pharmaceutical sector. Therefore we encourage Members to further reaffirm the Declaration by: Recognizing that some of these Members have insufficient or no manufacturing capacities in the pharmaceutical sector and could face difficulty in making effective use of the compulsory licensing provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) in order to address those grave public health concerns;

8 IP/C/W/358 Page However, the criterion of capacity established in Paragraph 6 of the Doha Declaration was not defined. To avoid disputes arising once a solution is adopted, Members should establish a procedure to clarify which developing country Members can be considered to have insufficient or no manufacturing capacity in the pharmaceutical sector or at least the factors to be taken into consideration. We would consider all least-developed Members to have insufficient capacity in the pharmaceutical sector. 13. The WTO Secretariat has provided data on capacity in the pharmaceutical sector in certain WTO Members. We are currently evaluating this information to determine what assistance it can provide Members in clarifying what constitutes insufficient or no manufacturing capacity in the pharmaceutical sector. IV. SITUATIONS TO BE ADDRESSED THROUGH EXPORTS 14. We have suggested preambular language defining the scope of the problems to be addressed by the solution and the Members it is intended to benefit. By once again drawing on the language of the Doha Declaration, we should next consider the situation that will trigger the invocation of the solution. 15. Clearly, the Doha declaration was directed at the needs of developing and least-developed Members. Therefore, it would seem appropriate that the solution be limited to developing and least-developed Members. Failure to do so would undermine what potential there could be under the solution for developing and least-developed Members to expand their pharmaceutical production capacity by supplying other developing and least-developed Members. If the solution were available to producers in the developed world, there might be little opportunity for producers in developing and leastdeveloped Members to supply pharmaceuticals under this mechanism. Therefore, regardless of the mechanism ultimately adopted to implement the solution, we should consider situations in which developing country Members with capacity in the pharmaceutical sector could be released from the restrictions contained in 31(f) to export pharmaceuticals to other developing or least-developed countries with insufficient capacity in the pharmaceutical sector. Pursuant to the Doha Declaration, least-developed countries were provided a further transition on obligations related to pharmaceuticals until 2016 and are thus not bound by Article 31(f) until that time. 16. We feel it would be appropriate for Members, in considering an exception to Article 31(f), to: Agree that a mechanism 1 shall operate to permit a developing country Member 2 having sufficient manufacturing capacity in the pharmaceutical sector to export needed pharmaceuticals to a developing or least-developed country that: Is afflicted by a public health problem, especially those resulting from HIV/AIDS, malaria, tuberculosis and other epidemics; and Has "insufficient or no manufacturing capacity in the pharmaceutical sector"; 17. While other approaches might have merit, there is a growing consensus among certain Members in support of using the existing framework of flexibility established in the TRIPS Agreement under Article 31 as a basis for a solution. It would appear there has been consensus from the outset of these discussions that, should a patent exist in the territory of the developing country Member seeking to import medicine, the Member could issue a compulsory licence to authorize such imports. 18. Therefore, in addition to the elements outlined above, we believe it would also be appropriate for Members to specify that a developing country Member seeking to import a needed pharmaceutical that is patented in its territory: 1 The exact legal nature of the mechanism has yet to be determined. It could take the form of a moratorium on dispute settlement or a waiver involving TRIPS Article 31(f) for particular countries, or an interpretation, or an amendment. 2 Least-developed Members have until 2016 to comply with obligations relating to pharmaceuticals.

9 IP/C/W/358 Page 4 Has authorized, in compliance with the provisions of TRIPS Article 31 (a)-(l), the use of the patent 3 ; or 19. However, concern has been expressed about how this solution will apply to Members seeking to import needed medicines that are not under patent in their territory. To address this specific concern, we recommend that, if the needed pharmaceutical is not patented in the territory, Members should specify that an importing country: V. TRANSPARENCY Has requested a developing or least-developed Member to manufacture and export the needed pharmaceutical to its territory; 20. All Members appreciate the need for a transparent and efficient WTO-based solution that will provide certainty for those Members addressed by paragraph 6. In devising this solution, we should seek to ensure that it gives Members the opportunity to respond to the grave health problems facing developing and least-developed Members with insufficient capacity in the pharmaceutical sector, including through improved offers by patent holders to supply the country in need. To that end, we recommend that Members taking advantage of this proposal inform the TRIPS Council of actions taken under this mechanism. This will also increase transparency and enable other Members to ensure that the medicines being exported actually reach the intended country and are not diverted into other markets. Members could: Agree that in authorizing such use or making such a request, relevant Members seeking to import the needed pharmaceutical will inform the TRIPS Council and provide the Council with information enabling interested Members to be responsive in the shortest time possible. Agree that the TRIPS Council shall keep under review the operation and effectiveness of this measure. VI. ELEMENTS RELATING TO EXPORTING MEMBERS 21. Having touched on the factors Members should take into account in determining what situations should exist in the country seeking to import under this solution, we should consider what steps the exporting developing country Member should undertake in responding to a request from a developing or least-developed country with insufficient capacity in the pharmaceutical sector. 22. Again, in considering an exception to Article 31(f), Members should: Agree that the developing country Members seeking to export needed pharmaceuticals under this mechanism shall: Authorize use of the patent in compliance with each provision of TRIPS Article 31, except for Article 31(f), including notice to the right holder in conformity with Article 31(b); 23. All WTO Members should expect that the exporting Member will seek to ensure that the medicines produced in its territory are not diverted from the Member for which they were intended, either by being diverted to other markets or by leaking onto the domestic market of the exporting Member. 24. Therefore, we would consider it reasonable for Members to agree that the exporting country also: Ensure that the entirety of the production is exported to the Member making the request. 3 It is further understood that in the event the importing Member owes, in accordance with Article 31, an amount of compensation to the right holder, such amount could take into account any compensation paid to the right holder under the licence issued in the Member country exporting the product.

10 IP/C/W/358 Page 5 VII. ELEMENTS RELATING TO ALL MEMBERS 25. Having given consideration to the scope of the solution and the elements for determining what situations may give rise to the application of the solution in both importing and exporting Members, we should also give consideration to the contribution Members that are not directly participating in the implementation of the solution in a particular case can make to the overall successful operation of the mechanism. 26. We believe that the TRIPS Council must, as part of any solution, affirm the commitment of all Members to take necessary steps to prevent diversion of the relevant pharmaceuticals into their markets, in order to ensure that the medicines reach the poor for whom they were intended. All WTO Members, consistent with their existing TRIPS obligations, should ensure that means are provided to prevent pharmaceuticals made available under this mechanism from being diverted from the markets for which they are intended. 27. The TRIPS Agreement already requires that Members provide the means for the right holder to prevent entry or sale of such infringing products. For example, Article 28 requires that right holders be able to prevent such entry or sale where a valid patent exists. In addition, at the border TRIPS Article 44.1 requires WTO Members to provide measures to stop infringing imports before they enter the stream of commerce. Article 44.1 provides that "the judicial authorities shall have the authority to order a party to desist from an infringement, inter alia, to prevent the entry into the channels of commerce in their jurisdiction of imported goods that involve the infringement of an intellectual property right, immediately after customs clearance of such goods". 28. Therefore, we believe it would be appropriate, in order to ensure that the successful implementation of the solution benefits those most in need, that Members: Agree that all Members, consistent with their existing TRIPS obligations, will ensure that means are provided to prevent pharmaceuticals made available under this mechanism from being diverted from the markets for which they were intended. VIII. MECHANISM FOR GIVING EFFECT TO THE SOLUTION Article While each option suggested by Members has some merit, at this stage we believe an expeditious, workable, transparent, sustainable and legally certain solution may more likely be achieved through either a moratorium for dispute settlement or a waiver of the obligation in TRIPS Article 31(f). A moratorium or waiver of the obligation of TRIPS Article 31(f) may have several advantages over other options suggested by Members. First, agreement can be reached on a moratorium or waiver much more easily and quickly than on an amendment to the TRIPS Agreement and further delay would be required for Members' formal acceptance. Crafting an amendment on which all Members can agree would delay implementation of the "expeditious solution" beyond the agreed deadline. Should an amendment be adopted, it could prove to be either ineffective or seriously harmful in practice. A further amendment of the Agreement would be required to correct this situation. Finally, if a country begins production for export relying on either an authoritative interpretation or an amendment, its actions could be challenged as being inconsistent with the interpretation or amendment. Because a country would only have full legal certainty after the conclusion of a dispute process - a situation that we would like to avoid - we are concerned that an interpretation or amendment will not deliver the legal certainty and security sought by many WTO Members. 30. In contrast, a moratorium or waiver (and the actions taken under them) would be approved in advance, which would provide the manufacturing country with certainty that its production and export of the product under the waiver will not be subject to challenge.

11 IP/C/W/358 Page 6 Article Some Members have suggested an authoritative interpretation of Article 30. Article 30 of the TRIPS Agreement permits Members to provide limited exceptions to patent rights "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 account of the legitimate interests of third parties". This provision is intended to apply to statutory exceptions already provided for in many countries' laws at the time the TRIPS Agreement was negotiated, situations such as non-commercial experimental use, use aboard vessels temporarily in the territory of a Member, and prior user rights. Interpreting Article 30 to allow Members to amend their patent laws to permit compulsory licences to be granted to authorize their manufacturers to produce and export patented pharmaceutical products to other countries would both unreasonably conflict with the normal exploitation of a patent and unreasonably prejudice the legitimate interests of the patent owner. The limited exceptions to patent rights authorized by Article 30 do not require a government decision in each case. Article 30 contains no requirements for notifying a patent owner of use, for establishing particular terms and conditions, for expiration if circumstances change, or for remuneration to the patent holder. The legitimate interests of third parties, in this case, the people facing health crises in other countries, can be dealt with adequately through the use of either a dispute settlement moratorium or a waiver of Article 31(f). Summary 32. With certain safeguards, developing country Members having sufficient manufacturing capacity in the pharmaceutical sector should be permitted to export pharmaceuticals to a developing or least-developed country that is afflicted by public health problems, especially those resulting from HIV/AIDS, malaria, tuberculosis and other epidemics, and that lacks manufacturing capacities in the pharmaceutical sector. Where patents exist in the exporting country, the exporting country would comply with each provision of TRIPS Article 31, except for Article 31(f). Further, the exporting country would have to ensure that the entirety of the production under compulsory licence is exported to the Member making the request. All Members undertake, consistent with existing TRIPS obligations, to prevent pharmaceuticals made available under this mechanism from being diverted from the markets for which they were intended. And finally, the TRIPS Council shall receive information and examine operation of the solution for the benefit of those Members for whom it is intended. 33. Notwithstanding the views we have expressed above, we continue to be willing to consider any proposed solution with respect to Article 31 that is expeditious, workable, transparent, sustainable and provides legal certainty. 34. We fully expect that by the next meeting of the TRIPS Council we will be prepared to offer further substantive contributions to this effort with even greater specificity on the key elements and mechanics of implementing a solution expeditiously by the end of the year.