WTO: agreement on intellectual property rights relating to trade and pharmaceutical patents

SUMMARY OF:

Decision 94/800/EC on the conclusion on behalf of the EU of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994)

Uruguay Round of Multilateral Trade Negotiations (1986-1994) — Agreement establishing the World Trade Organization (WTO)

WHAT IS THE AIM OF THE DECISION AND THE AGREEMENT?

The decision approves, on behalf of the European Community (the EU today), the agreement establishing the WTO.

The part of the agreement summarised here has 2 main aims:

1.
to ensure effective and appropriate protection for trade-related intellectual property rights, taking into account differences in national legal systems;
2.
to lay down standards concerning the availability, scope and use of intellectual property rights relating to trade and pharmaceutical patents.

KEY POINTS

During the World Trade Organization (WTO) Uruguay Round multilateral negotiations (1986-1994), the EU signed an agreement on the trade-related aspects of intellectual property rights (TRIPS). Pharmaceutical patents are among the intellectual property rights the agreement is intended to protect.

GENERAL RULES AND PRINCIPLES

The principles are those of national treatment and most-favoured-nation treatment. This means members of the WTO cannot normally discriminate between their trading partners. If they grant a fellow member a special favour (such as a lower customs duty rate for one of their products) they have to do the same for all other WTO members. The agreement aims to ensure that adequate rules on the protection of intellectual property are applied in all member countries, on the basis of the basic obligations laid down by the World Intellectual Property Organization (WIPO) in the various conventions on intellectual property rights, particularly the Paris Convention for the Protection of Industrial Property. Numerous new rules or stricter rules are introduced in fields not covered by the existing conventions or where the existing conventions are inadequate.

The agreement covers a vast range of topics, from copyright and trademarks to layout designs of integrated circuits and trade secrets. Patents protecting pharmaceutical products and other products are also part of this agreement.

Intellectual property rights for pharmaceutical patents

Patents provide the patent owner with the legal means to prevent others from making, using, or selling the new invention for a limited period of time, subject to a number of exceptions. Patents are not marketing authorisations.

The TRIPS agreement states that it must be possible for all inventions to be protected by a patent for 20 years, whether for a product (such as a medicine) or a process (a method of producing an ingredient for a medicine). To qualify for a patent, an invention has to be new, it must be an inventive step and it must have industrial applicability. In addition, patented inventions have to be disclosed, enabling others to study the invention even while it is patent-protected.

Governments can refuse to grant patents for the 3 reasons set out below:

1.
for inventions whose commercial use needs to be prevented to protect human, animal or plant life or health;
2.
for diagnostic, therapeutic and surgical methods for treating humans or animals;
3.
for certain plant and animal inventions.

Governments also play a supervisory role and can act to prevent patent owners from abusing these rights (anti-competitive practices) or hampering the transfer of technology. The TRIPS agreement allows for limited exceptions to patent rights. These exceptions must not unreasonably conflict with the normal use of the patent. These exceptions are used in very different instances and in particular:

to advance science and facilitate the transfer of technology, by allowing researchers to use a patented invention for research (research exception);
to speed up the process of marketing a generic drug, by allowing manufacturers of generic drugs to obtain marketing approval using the patented invention, before the patent protection expires. They can then market their versions as soon as the patent expires, because the lengthy marketing authorisation procedure has already been completed (the Bolar provision).

Flexibility in the application of patent law: compulsory licensing and parallel imports

In addition to the 2 exceptions to patent law mentioned above (the Bolar provision and research exception), the TRIPS agreement allows for 2 other forms of flexibility: compulsory licensing and parallel imports (see below). These 2 systems should make it possible to strike a balance between promoting access to existing drugs and promoting research and development into new drugs.

Compulsory licensing

Governments can issue compulsory licences which allow someone else to produce the patented product or use the patented process without the consent of the patent owner. The granting of compulsory licences without the authorisation of the patent owner can only be done under certain conditions aimed at protecting the legitimate interests of the patent holder.

In particular, the party applying for a licence must have first attempted, unsuccessfully, to obtain a voluntary licence from the patent holder on reasonable commercial terms and within a reasonable period of time.

In addition, these compulsory licences should be granted mainly to supply the domestic market.

There is, however, no need to apply for a voluntary licence in advance in the following cases:

national emergencies;
other circumstances of extreme urgency;
public non-commercial use;
anti-competitive practices.

Parallel imports

The term parallel imports is used when a company imports from another country products that are also manufactured and marketed by the patent holder in the country in which that company is based. The legal principle here is exhaustion, the idea that once a pharmaceutical company has sold the product, its patent rights are exhausted and it no longer has any rights over what happens to the product. This therefore allows any other company to buy the product in a country where it is cheaper, and import it to profit financially from the difference in prices. The TRIPS agreement points out that disputes about parallel imports cannot be handled by the WTO. This means that, as stated in the Doha Declaration, each member of the WTO can establish its own rules on exhaustion.

IMPLEMENTATION OF THE AGREEMENT

Enforcement of intellectual property rights

The laws of WTO member countries must include procedures to ensure that intellectual property rights are respected both by foreign rights holders and by their own nationals.

These procedures:

must permit effective action against any act of infringement of these rights and be fair and equitable.
must neither be unnecessarily complicated or costly, nor entail unreasonable time limits.

Final administrative decisions may be reviewed by a judicial authority.

The agreement provides details concerning evidence, injunctions, damages, provisional measures and other remedies.

Transition period

With regard to the application of the agreement, developed countries had a period of one year to bring their legislation and practices in line with the agreement. This period was extended to 5 years (i.e. to 2000) for developing countries and countries which were changing from a centrally-planned economy to a market economy, and to 11 years (i.e. to 2006) for the least-developed countries (LDCs), with the possibility for the latter obtaining an extension.

On 29 November 2005, the Council for TRIPS decided to extend the transitional period for LDCs until 1 July 2013. On 6 November 2015, the Council for TRIPS decided that least-developed countries would not have to protect pharmaceutical patents and test data until 1 January 2033.

For pharmaceutical products, developing countries that did not provide product patent protection on 1 January 1995 (when the TRIPS Agreement came into force) had up to 10 years to introduce this protection. In the meantime, they had to comply with 2 conditions:

1.
they had to allow inventors to file patent applications from 1 January 1995, even though they did not have to decide on whether or not to grant the patent until the end of this transition period (the mailbox rule);
2.
if the government allowed a pharmaceutical product to be marketed during the transition period, they must grant the patent applicant an exclusive marketing right for the product for 5 years.

On 30 November 2015, the General Council decided that those 2 obligations of LDCs should not apply until 1 January 2033, or until a time when they were no longer least-developed countries.

Institutional framework

The agreement created a Council for Trade-Related Aspects of Intellectual Property Rights (the Council for TRIPS). It is responsible for monitoring the operation of the agreement, ensuring that members comply with their obligations and affording opportunities for consultations between members.

The settlement of disputes over intellectual property is governed by the dispute settlement procedures adopted following the Uruguay Round negotiations.

FROM WHEN DO THE DECISION AND THE AGREEMENT APPLY?

The decision has applied since 22 December 1994.
The agreement has applied since 1 January 1995.

BACKGROUND

For more information, see:

EU and WTO(European Commission).
TRIPS and public health(WTO).

MAIN DOCUMENTS

Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, with regard to matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ L 336, 23.12.1994, pp. 1–2)

Uruguay Round of Multilateral Trade Negotiations (1986-1994) — Agreement establishing the World Trade Organization (WTO) (OJ L 336, 23.12.1994, pp. 3–10)