Will the August 20, 2003 Decision of the WTO Provide Adequate Protection for Patent Holders Rights and Is Diversion Still a Threat to the Pharmaceutical Industry?

By Pearson, Slone | The Journal of High Technology Law, July 2005 | Go to article overview

Will the August 20, 2003 Decision of the WTO Provide Adequate Protection for Patent Holders Rights and Is Diversion Still a Threat to the Pharmaceutical Industry?


Pearson, Slone, The Journal of High Technology Law


On August 20, 2003 World Trade Organization (WTO) member governments broke their deadlock (1) over intellectual property protection and public health, resulting in an international agreement. (2) The new agreement, titled "Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health," allows any member country producing pharmaceuticals under compulsory licenses (3) to export to other member countries; (4) a privilege expected to be used only in good faith in order to deal with public health crises such as HIV/AIDS, tuberculosis and malaria. (5) Developed countries, however, remain fearful that the decision might be abused by developing countries and that patent protection may be undermined. (6) Many pharmaceutical companies are particularly concerned with a potential increase in diversion (7) of pharmaceuticals produced in response to public health crises. (8) Diversion not only defeats the purpose of the WTO decision, (9) but threatens research and development into new therapies for AIDS and other diseases. (10) Paragraph 2(b)(ii) of the Paragraph 6 Decision attempts to address these valid concerns by requiring exporting countries to clearly identify pharmaceuticals being produced under compulsory license through special packaging, coloring and shaping of products. (11)

This article examines the effectiveness of the requirements of importing and exporting member countries under the Paragraph 6 Decision and the "Best Practices" guidelines suggested by the WTO in order to prevent diversion of pharmaceuticals. Additionally, remedies available to patent holders that are victims of diversion under United States and International law are discussed. Finally, the article proposes other programs and mechanisms available to government entities and private pharmaceutical companies that would ensure shipments make it to the intended recipients.

I. BACKGROUND

A. International Intellectual Property Protection

As a result of a comprehensive debate in the 1995 Uruguay Rounds of the Negotiations on the General Agreement on Tariffs and Trade (GATT), the World Trade Organization (WTO) was created. (12) Another result of this "package deal" was the Agreement on Trade Related Aspects of Intellectual Property Rights ("TRIPS"), which is the most controversial component, subject to both praise and blame. (13) The goal of TRIPS was to harmonize world intellectual property (IP) laws. (14) TRIPS sets out minimum standards for the protection and enforcement of international IP rights, including copyrights, patents and trademarks. (15) TRIPS also established minimum standards to which each nation must adhere concerning the enforcement of domestic intellectual property rights. (16) Specific provisions cover civil and administrative procedures and remedies, provisional measures, border enforcement procedures, and criminal procedures. (17) Although some see TRIPS as accomplishing the goal of harmonization with a fair balancing among differing interests, others, mainly developing nations, refute this claim. (18) Some developing country Members of the WTO believe that implementation of their domestic public health policies are adversely affected by the limitation of access to essential medicines (19) needed during public health crises due to TRIPS provisions. (20) While it is true that other factors such as infrastructure and professional support play an important role in determining access to drugs, it is also true that the prices that result from the existence of patents ultimately determine how many people suffering from AIDS and other diseases may go untreated. (21)

The WTO attempted to address these concerns by writing flexibilities, such as compulsory licensing, into the TRIPS Agreement. (22) Article 30 of the Agreement allows governments to issue compulsory licenses to companies to make patented products or use patented processes under license without the consent of the patent owner, but only under certain conditions aimed at safeguarding the legitimate interests of the patent holder. …

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