US Industry Perspectives on the Impact of the Doha Public Health Declaration on the Future of TRIPs

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1 US Industry Perspectives on the Impact of the Doha Public Health Declaration on the Future of TRIPs Prepared Remarks By Ronald E. Myrick Chief Intellectual Property Counsel, General Electric Company To the ICC/AIPLA Conference on the Future of TRIPs: Impact of the Doha Public Health Declaration Paris, France September 13, 2002 I am privileged to speak for American industry on this vitally important subject. Thank you for the opportunity to address you today. 1 GE, while not a pharmaceutical company, is watching very closely the current Paragraph 6 exercise on export compulsory licensing, just as it watched last year s roll out of the Public Health Declaration at the WTO Ministerial meeting in Doha. Similarly, other elements of American industry are watching the current developments in Geneva very closely. Today, I speak for US industry broadly. My comments are my own, synthesized to express industry concerns not necessarily those of GE. The HIV/AIDS epidemic is, indeed, one of the great tragedies of our time. I do not minimize it for one second. Bringing the spread of the disease under control especially in Sub-Saharan Africa and other developing countries and finding a cure for the disease are among the great challenges that we face today. I am, however, concerned that, in drafting the Doha Public Health Declaration, we may have agreed to interpretations of the TRIPs Agreement that may indeed make sense in the context of the current HIV/AIDS crisis, but that could serve as precedents when applied to other industries in other public policy-related situations. Among the principal objectives for the TRIPs negotiations that were enshrined in the TRIPs Agreement were: An end to the discrimination among technological sectors found in many patent systems with respect to the enjoyment of patent rights. This objective is reflected in TRIPs Article 27.1, which declared that patents shall be available and patent rights enjoyable without discrimination as to the field of technology. 2 1 I would like to acknowledge the assistance of Jacques J. Gorlin in the preparation of these remarks. 2 The full text of TRIPs Article 27.1 reads: Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent 1

2 A limitation on the use of compulsory licensing and other forms of use without the authorization of the right holder, which is principally found in TRIPs Article A limitation on the exceptions to the patent right that national patent systems could incorporate. TRIPs Article 30 borrowed from the long-established and rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. 3 The full text of TRIPs Article 31 reads: Where the law of a Member allows for other use of the subject matter of a patent without the authorization of the right holder, including use by the government or third parties authorized by the government, the following provisions shall be respected: (a) authorization of such use shall be considered on its individual merits; (b) such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public noncommercial use. In situations of national emergency or other circumstances of extreme urgency, the right holder shall, nevertheless, be notified as soon as reasonably practicable. In the case of public noncommercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government, the right holder shall be informed promptly; (c) the scope and duration of such use shall be limited to the purpose for which it was authorized, and in the case of semi-conductor technology shall only be for public non-commercial use or to remedy a practice determined after judicial or administrative process to be anti-competitive; (d) such use shall be non-exclusive; (e) such use shall be non-assignable, except with that part of the enterprise or goodwill which enjoys such use; (f) any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use; (g) authorization for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. The competent authority shall have the authority to review, upon motivated request, the continued existence of these circumstances; (h) the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization; (i) the legal validity of any decision relating to the authorization of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member; (j) any decision relating to the remuneration provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member; (k) Members are not obliged to apply the conditions set forth in subparagraphs (b) and (f) where such use is permitted to remedy a practice determined after judicial or administrative process to be anti-competitive. The need to correct anti-competitive practices may be taken into account in determining the amount of remuneration in such cases. Competent authorities shall have the authority to refuse termination of authorization if and when the conditions which led to such authorization are likely to recur; (l) where such use is authorized to permit the exploitation of a patent ( the second patent ) which cannot be exploited without infringing another patent ( the first patent ), the following additional conditions shall apply: (i) the invention claimed in the second patent shall involve an important technical advance of considerable economic significance in relation to the invention claimed in the first patent; (ii) the owner of the first patent shall be entitled to a cross-licence on reasonable terms to use the invention claimed in the second patent; and (iii) the use authorized in respect of the first patent shall be non-assignable except with the assignment of the second patent. 2

3 well-respected Berne Convention language that would permit limited exceptions to the exclusive patent rights, provided that such exceptions meet a tripartite test: they may not unreasonably conflict with a normal exploitation of the patent; unreasonably prejudice the legitimate interests of the patent owner; and they must take into account the legitimate interests of third parties. 4 A recognition, memorialized in TRIPs Article 8, that, while WTO members may adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socioeconomic and technological development, these measures must be consistent with the provisions of the Agreement. 5 Let me briefly explain the concerns of US industry. The Doha Public Health Declaration and the export compulsory licensing exercise, while they are aimed at pharmaceutical patents, could be the first step in a broader challenge to the overall value of intellectual property protection for economic development. This questioning of the benefits that developing countries will accrue from intellectual property protection, for example, is the basic premise of the export compulsory licensing issue. Those who raised the issue argue that countries that do not have the domestic capacity to take advantage of the compulsory licensing provisions of TRIPs Article 31 need alternatives to their dependence on the exclusive rights provided by patents. This is not a conceptual problem that is specific to the pharmaceutical industry. Today, intellectual property protection for pharmaceutical products is being questioned. Tomorrow, for example, it may be copyright protection for educational software or medical texts or patent protection for medical devices. If that is the case, then we need to look at the Doha Public Health Declaration and the suggested solutions to the export compulsory licensing issue not as an isolated incident that seeks to deal with a limited access to medicines issue but as containing the potential, if not kept in the proper perspective, for a broad diminution by the developing countries of intellectual property protection. As I indicated, one of the cornerstones of the TRIPs Agreement was nondiscrimination among technological sectors with respect to the availability of patents and the enjoyment of patent rights. This provision, contained in Article 27.1, follows the 4 The full text of TRIPs Article 30 reads: Members may provide limited exceptions to the exclusive rights conferred by a patent, 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. Article 9(2) of the Berne Convention reads: It shall be a matter for legislation in countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author. 5 The full text of TRIPs Article 8.1 reads: Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement. 3

4 requirement earlier in the same article that patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an innovative step and are capable of industrial application. The agreement by the WTO Ministers assembled in Doha to focus on pharmaceutical patents in the Public Health Declaration raises a question about their commitment to the non-discriminatory treatment of all technological sectors. The TRIPs Agreement clearly states that, with certain limitations, if an invention meets the well-recognized patentability criteria, it shall be patentable. The immediate concern on access to medicines that permitted the Doha Public Health Declaration to focus on pharmaceutical patents could be replaced in the near future by another political albeit, laudable--objective that would expose the patents of other industries. We may already be on that slippery slope in the export compulsory license exercise. I note that the paper put out by the African Group prior to the June TRIPs Council meeting suggested a wider definition for "pharmaceutical products" that potentially went far beyond medicines to related technical processes, and related technical equipment. 6 Another concern is the current push to turn compulsory licenses from limited exceptions to the patent right to a norm found in the TRIPs Agreement that gives countries the flexibility to weaken patent protection in the name of public policy. In this regard, the problem is not so much with respect to what the Doha Public Health Declaration specifically says about compulsory licensing. Rather, the problem is in the political message about the market exclusivity provided by a patent that the Doha Public Health Declaration and the export compulsory licensing exercise that it launched convey. Taken in the aggregate, the provisions of the Doha Public Health Declaration underscore the fact that WTO members have the right to grant compulsory licenses and the freedom to determine the grounds on which they are granted. 7 Anyone familiar with the history of the TRIPs negotiations knows that the negotiators did not seek to limit the circumstances for the issuance of compulsory licenses. Rather, they developed 6 In this regard, the phrase pharmaceutical products should [be] construed broadly in order to be meaningful, rather than narrowly in a manner that would restrict it to only limited components of treatment or medicines. Pharmaceutical products should be understood to include medicines, related technical processes and related technical equipment. (Proposal on Paragraph 6 of the Doha Declaration on the TRIPs Agreement and Public Health, Joint Communication from the African Group in the WTO, Document IP/C/W 351, 24 June 2002) 7 Paragraph 5 of the Doha Declaration states: Accordingly and in the light of paragraph 4 above, while maintaining our commitments in the TRIPS Agreement, we recognize that these flexibilities include: (a) In applying the customary rules of interpretation of public international law, each provision of the TRIPS Agreement shall be read in the light of the object and purpose of the Agreement as expressed, in particular, in its objectives and principles. (b) Each Member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted. (c) Each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency. 4

5 conditions that would limit their use. The emphasis found in the Doha Public Health Declaration on the freedom to issue compulsory licenses without the parallel repetition of the fact that the TRIPs Agreement contains limitations on the grant of such compulsory licenses is troubling because of the signal that it may send about the importance that the WTO Trade Ministers attach to those limitations. It is these limitations, especially those found in Article 31(b) regarding prior notice to the right holder and in Article 31(c) limiting the scope of the compulsory license to the purpose for which the use was authorized, which provide the critical safeguards against the abuse of compulsory licenses. The basic premise of the export compulsory licensing exercise launched in paragraph 6 of the Doha Public Health Declaration may be problematic: yes, a solution needs to be found in order to permit countries that have insufficient or no manufacturing capacities in the pharmaceutical sector to take advantage of the compulsory licensing provisions of the TRIPs Agreement, if necessary. 8 But care should be exercised that such logic not be used, in the future, to condone unchecked compulsory licensing practices in other technological sectors in order to meet a public policy objective that will have a direct impact on broader commercial interests. In this regard, it is a concern that, again, in the name of the laudable objective of improving access, in the near term, to medicines, the Doha Public Health Declaration may have reversed the relationship between public policy measures and the TRIPs Agreement. As I indicated earlier, TRIPs Article 8 permits such measures, provided that they are consistent with the provisions of this Agreement. Paragraph 4 of the Doha Public Health Declaration states: We agree that the TRIPs Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPs Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members right to protect public health and, in particular, to promote access to medicines for all. The Doha Public Health Declaration appears to have affirmed that public policy takes precedence over TRIPs. Our concern stems from the fact that the measures covered by TRIPs Article 8 are very broad: the article discusses measures to promote the public interest in sectors of vital importance to socioeconomic and technological development as well as measures necessary to protect public health and nutrition. Even if paragraph 4 of the Doha Public Health Declaration only applies to public health crises and does not have any implications for other public policy areas, the words of the Declaration may be interpreted to include industrial sectors whose patents extend far beyond the pharmaceutical sector. The long-term implications of the Doha Public Health Declaration also extend to the mechanism that the Members of the TRIPs Council will choose for giving effect to the export compulsory licensing solution. A number of papers presented at the June TRIPs 8 Paragraph 6 of the Doha declaration reads: We recognize 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. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of

6 Council meeting suggested that the mechanism should be an authoritative interpretation of the exception to the patent right found in TRIPs Article I do not need to tell this audience that an exception to the patent right permits the taking of otherwise infringing activities without the prior authorization of the right holder. As the United States so well responded in its own paper, 10 such an interpretation of Article 30 would fly in the face of the intent of the negotiators, who sought to apply the article to statutory exceptions already provided in the laws of many countries at the time that the TRIPs Agreement was negotiated. Article 30 sought to cover situations such as non-commercial experimental use, use aboard vessels temporarily in the territory of a Member and prior user rights not the export of a patented product by a generic manufacturer for the supply of another country s pharmaceutical needs. While, at the end of the day, we may be able to agree on a satisfactory substantive solution to the export compulsory licensing issue, we should not enshrine it in a mechanism that will negate the exclusivity provided by the intellectual property rights referenced in the TRIPs Agreement. To summarize, the possibility that the Doha Public Health Declaration may have set precedents for the reinterpretation of the TRIPs Agreement is troubling. While some of the provisions of the Declaration may have sounded reasonable in the context of the access to medicines issue and could have been justified as having avoided the reopening of the TRIPs Agreement, they may very well have set precedents that will make it difficult for us to deny their application when confronted with situations where intellectual property protection is viewed as standing in the way of measures that governments will want to take in the name of public policy. The Doha Declaration on TRIPs and Public Health is behind us. The export compulsory licensing exercise, which is still underway in the WTO TRIPs Council, is another matter. US and EU negotiators still have the ability to contain the potential damage to the protection of intellectual property rights that is possible in the exercise. I would urge our colleagues from the US Government and the European Commission who are with us today to err on the side of caution when they go back to Geneva and craft the export compulsory licensing solution mandated by paragraph 6 of the Doha Declaration on TRIPs and Public Health. 9 Without prejudice to the possibility of Members seeking additional expeditious solutions to the problem identified in Paragraph 6, the TRIPs Council should recommend an authoritative interpretation of Article 30 of the TRIPs Agreement, so as to recognize the right of WTO Members to authorize third parties to make, sell and export patented public health-related products without the consent of the patent holder to address public health needs in another country. (Submission by Bolivia, Brazil, Cuba, China, Dominican Republic, Ecuador, India, Indonesia, Pakistan, Peru, Sri Lanka, Thailand and Venezuela to the TRIPs Council on Paragraph 6 of the Ministerial Declaration on the TRIPs Agreement and Public Health, Document IP/C/W351, 24 June 2002.) Members should be permitted to provide in their laws or to adopt measures for exports of necessary pharmaceutical products to any products to any countries, particularly developing and least developed Members that need support to address public health concerns. This could be permitted as a limited and reasonable exception to patent rights under Article 30 (Joint Communication from the African Group.) 10 A Second Communication from the United States of America Relating to Paragraph 6 of the Ministerial Declaration on the Trips Agreement and Public Health, Document IP/C/W/358, 25 June