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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.
Panel and Appellate Body proceedings
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 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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