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DISPUTE SETTLEMENT: DISPUTE DS114

Canada — Patent Protection of Pharmaceutical Products

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

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The summary below was up-to-date at
See also: One-page summary of key findings of this dispute

Appellate Body and Panel Reports Adopted

Complaint by the European Communities and their member States.

On 19 December 1997, the EC requested consultations with Canada in respect of the alleged lack of protection of inventions by Canada in the area of pharmaceuticals under the relevant provisions of the Canadian implementing legislation, in particular the Patent Act. The EC alleged that Canada’s legislation is not compatible with its obligations under the TRIPS Agreement, because it does not provide for the full protection of patented pharmaceutical inventions for the entire duration of the term of protection envisaged by Articles 27.1, 28 and 33 of the TRIPS Agreement.

On 11 November 1998, the EC requested the establishment of a panel. At its meeting on 25 November 1998, the DSB deferred the establishment of a panel. Further to a second request to establish a panel by the EC, the DSB established a panel at its meeting on 1 February 1999. Australia, Brazil, Colombia, Cuba, India, Israel, Japan, Poland, Switzerland, Thailand and the United States reserved their third-party rights. On 15 March 1999, the EC and their member States requested the Director-General to determine the composition of the Panel. On 25 March 1999, the Panel was composed. The report of the panel was circulated to Members on 17 March 2000. The panel found that:

• the so-called regulatory review exception provided for in Canada’s Patent Act (Section 55.2(1)) — the first aspect of the Patent Act challenged by the EC — was not inconsistent with Article 27.1 of the TRIPS Agreement and was covered by the exception in Article 30 of the TRIPS Agreement and therefore not inconsistent with Article 28.1 of the TRIPS Agreement. Under the regulatory review exception, potential competitors of a patent owner are permitted to use the patented invention, without the authorization of the patent owner during the term of the patent, for the purposes of obtaining government marketing approval, so that they will have regulatory permission to sell in competition with the patent owner by the date on which the patent expires.
   
• the so-called stockpiling exception (Section 55.2(2)) —the second aspect of the Patent Act challenged by the EC, was inconsistent with Article 28.1 of the TRIPS Agreement and was not covered by the exception in Article 30 of the TRIPS Agreement. Under the stockpiling exception, competitors are allowed to manufacture and stockpile patented goods during a certain period before the patent expires, but the goods cannot be sold until after the patent expires. The panel considered that, unlike the regulatory review exception, the stockpiling exception constituted a substantial curtailment of the exclusionary rights required to be granted to patent owners under Article 28.1 to such an extent that it could not be considered to be a limited exception within the meaning of Article 30 of the TRIPS Agreement.

The DSB adopted the panel report at its meeting on 7 April 2000.

Implementation Status of Adopted Reports

Pursuant to Article 21.3 of the DSU, Canada informed the DSB on 25 April 2000 that it would require a reasonable period of time in order to implement the recommendations of the DSB. Since the parties failed to reach a mutually satisfactory solution as to the “reasonable period of time” for implementation of the recommendations of the DSB, despite a mutually agreed extension of the period of time foreseen in Article 21.3(b) of the DSU, on 9 June 2000, the European Communities and their member States requested that the reasonable period of time be determined by arbitration pursuant to Article 21.3(c) of the DSU. The arbitrator determined, pursuant to Article 21.3 of the DSU, that the reasonable period of time for Canada to implement the recommendations and rulings of the DSB is six months from the date of adoption of the panel report and that the reasonable period would thus end on 7 October 2000. At the DSB meeting of 23 October 2000, Canada informed Members that, effective from 7 October 2000, it had implemented the DSB’s recommendations.

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