The document discusses a dispute between the European Communities and Canada regarding certain provisions in Canada's Patent Act relating to pharmaceutical patents. Specifically, EC claimed Sections 55.2(1) and 55.2(2) of the Canadian Patent Act violated TRIPS obligations. Section 55.2(1) allows activities reasonably related to obtaining marketing approval without patent holder consent. Section 55.2(2) allows stockpiling patented medicines in the last six months of the patent term. The panel found Section 55.2(2) was not a limited exception under TRIPS Article 30 and violated Article 28 rights. It found Section 55.2(1) was a limited exception that did not unreasonably conflict

1. Canada– Patent Protection of
Pharmaceutical Products (DS 114)
Presented by: I32031 - Hang Nguyen
I33017 - Li Nan
I33023 - Yuan Huan

2. Main issues
 European Communities and its member states claimed
Canadian’s legislation about pharmaceuticals (which
was also called as Patent Act), is not compatible with
its obligations under the TRIPS Agreement.
 The provisions of the Patent Act, Section 55.2(1) and
Section 55.2(2), create the exceptions to the exclusive rights
of patent owners.

3. EC’s argument:
 Canadian law violated the Article 27.1 (non discrimination rule)
and Article 28.1 (exclusive rights of patent owners).
Canada’s argument:
 Violation of Article 28.1?  Section 55.2(1) and Section 55.2(2)
are the exceptions authorized by Article 30.
 Violation of Article 27.1?  Article 27.1 does not apply to the
measures authorized by Article 30. Even if it applies, these two
provisions do not discriminate in violation of Article 27.1
 Violation of Article 33?  Section 55.2(2) does not violate Article
33.
Main arguments

4. The relevant provisions of Canadian’s patent act
 Patent Act, Section 55.2(1)—Regulatory Review Exception:
“It is not an infringement of a patent for any person to make,
construct, use or sell the patented invention solely for uses reasonably
related to the development and submission of information required under
any law of Canada, a province or a country other than Canada that
regulates the manufacture, construction, use or sale of any product.”

5. The relevant provisions of Canadian’s patent act
 Patent Act, Section 55.2(2) - The stockpiling exception
“It is not an infringement of a patent for any person who makes,
constructs, uses or sells a patented invention in accordance with
subsection to make, construct or use the invention, during the
applicable period provided for by the regulations, for the
manufacture and storage of articles intended for sale after the
date on which the term of the patent expires.”
 Manufacturing and storage of Patented Medicines Regulation. By virtue
of these Regulations , the applicable period referred to in subsection
55.2(2) of the Patent Act is the six month period immediately
preceding the date on which the term of the patent expires.

6. The relevant provisions of TRIPS Agreement
 Article 30 Exceptions to Rights Conferred
“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.”

7. The relevant provisions of TRIPS Agreement
 Article 27 Patentable Subject matter
“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
incentive step and are capable of industrial application. Subject to
paragraph 4 of Article paragraph 8 of Article 70 and paragraph 3 of
this Article, patents shall be available and patent rights
enjoyable without discrimination as to the place of
invention, the field of technology and whether products
are imported or locally produced.”

8. The relevant provisions of TRIPS Agreement
 Article 28 Rights Conferred
“(a) where the subject matter of a patent is a product, to prevent third
parties not having the owner’s consent from the acts of: making, using,
offering for sale, selling, or importing for these purposes that product; (b)
where the subject matter of a patent is a process, to prevent third parties
not having the owner’s consent from the act of using the process, and
from the acts of: using, offering for sale, selling, or importing for these
purposes at least the product obtained directly by that process.”
 Article 33 Term of Protection
“The term of protection available shall not end before the expiration of a
period of twenty years counted from the filing date .”

9. • From the article 28.1, it gives patent holders the exclusive rights of
making, using, offering for sale, selling, or importing.
• But the section 55.2(2) allows the acts which was referred to article 28.1
(a) and (b) related to product patent and process patent which give the
exclusive right to patent owners.(Five basic rights)
• It means that anybody was allowed to perform the act of making,
constructing and using of the invention during the last six month of
the patent term without the authorization of the patent holder.
• Canadian act permits at least three activities, it curtail the patent right.
Conflict between
Section 55.2(2) and Article 28.1

10. Canada
Arguments
Section 55.2(2)
is a limited
exception under
Article 30 of
TRIPS Agreement.
 Article31 Vienna Convention
"[a] treaty shall be interpreted in good faith in
accordance with the ordinary meaning to be given to
the terms of the treaty in their context and in the light
of its object and purpose".
 Article 7 of TRIPS Agreement
”the protection and enforcement of intellectual
property rights should contribute to the promotion of
technological innovation and to the transfer and
dissemination of technology, to the mutual advantage
of producers and users of technological knowledge
and in a manner conducive to social and
economic welfare, and to a balance of rights
and obligations”. take the social welfare into
consideration

11. Section 55.2(2)
is a limited
exception under
Article 30 of
TRIPS Agreement.
 Article 8 of the Agreement: (Article 8.1)
Principles
1. Members may, in formulating or amending their
laws and regulations, adopt measures necessary to
protect 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.
Article 8.1 elaborates the socio-economic policies,
with particular attention to health and nutritional
policies
Canada
Arguments

12. Canada
Arguments
Section 55.2(2)
is a limited
exception under
Article 30 of
TRIPS Agreement.
 Section 55.2(2) only allows the third party who
made, constructed, used or sold a patented
invention, in the manner contemplated by
subsection 55.2(1), during the last six
months of the patent term only for the
purposes of manufacture and storage of
articles.
• ‘Limited’ -- "confined within definite
limits", or "restricted in scope, extent,
amount".
• The stockpiling exception in Section 55.2(2) is
restricted in scope because it has only a limited
impact on a patent owner's rights.
• The commercial sales of the patent owner during
the term or any other economic benefit of a patent
will not be affected. The exclusive right to sell is
preserved .

13. Article 30: first requirement - Limitation Exceptions
The manufacturing and stockpiling possibility under Canadian law is inconsistent with a
limited exception under article 30 of the TRIPS agreement. It is not a limited
exception.
1) In article 28.1, there are five fundamental rights of making, using, offering for sale,
selling and importing. But the section 55.2(2) stockpiling and manufacturing under
the Canadian law is not a limited, at least took away three of these rights. The right to
prevent others from making and using and importation. So impairment of three out
of five basic rights is in itself extensive enough to be considered "not limited”.
2) there was no limitation as to the quantities of material that could be manufactured
and stockpiled.
3) there is no royalty fees are due for such production, and that the patent holder does
not even have a right to be informed of the use of the patent.
Conflict between
Section 55.2(2) and Article 30

14. Interpretation of Article 30
‘Three-step Test’:
 (1) the exception must be ‘limited’;
 Different from “in certain special cases”, Article 9(2) of the Berne
Convention
 Narrow exception
 (2) the exception must not ‘unreasonably conflict with normal
exploitation of the patent’;
 ‘exploitation’ = commercial activity for economic benefits
 (3) the exception must not ‘unreasonably prejudice the
legitimate interests of the patent owner, taking account of the
legitimate interests of third parties’.
 ‘legitimate interest’ – in a legal discourse: a normative claim calling for
protection of interests that are ‘justifiable’ in the sense that they are
supported by relevant public policies or other social norms

15. Panel’s Findings
Case of stockpiling:
 The Panel did not agree with the EC’s position that the curtailment of legal
rights can be measured by simply counting the number of legal rights impaired
by an exception.
 The Panel could not accept Canada’s argument that the curtailment of the
patent owner’s legal rights is ‘limited’ just so long as the exception preserves
the exclusive right to sell to the ultimate consumer during the patent term.
 The question of whether the stockpiling exception is a ‘limited’ exception turns
on the extent to which the patent owner’s rights to exclude ‘making’ and ‘using’
the patented product have been curtailed.
  the stockpiling exception removes that protection entirely during the last six
months of the patent term.

16. Panel Report
 The stockpiling exception (Section 55.2(2)) 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.

17. • Article 28.1 it gives the exclusive right to the patent owners during
the patent period.
Conflict between Canadian domestic law and international law.
• Canadian patent act allowed all activities ( which is only given to the patented
owners ) related to obtain marketing approval carried out by a third party
without the consent of the patent holder at any time during the patent term.
1) no limited in time, they might be performed without the consent of the right
holder at any point in time during the 20-year patent term.
2) it took away all the right of a patent granted its owner, did not stipulate any
quantitative limits for these activities.
Conflict between
Section 55.2(1) and Article 28.1

18. Canada
Arguments
Section 55.2(1)
Regulatory
Review
Exception
 Limited Exception
• The right given to the third parties does not
damage patent owner’s right to exclude all other
“commercial sale” of the patented products during
the term of the patent.
• Subsequent practices of other WTO members
 US’s "Bolar exemption"
 Argentina, Australia, Hungary and Israel’s similar
legislation
 Japan and Portugal’s interpretations

19. First requirement: Section 55.2(1) of the Canadian patent act is not a limited exception
under article 30 of the TRIPS agreement.
1) permits third parties to perform all five of the activities which is the exclusive rights
of patent owners. Only the intentions of the activities is related to the development and
submission of information required for obtaining marketing approval. Curtail all
the patented rights, even the rights to prevent selling and offering for sale  the wide-
ranging activities by so many operators would substantial impaired the exclusive
rights of patent owners.
2) there is no limited in timing, the denial patent protection under article 55.2(1) of the
Canadian patent act could occur at any time during the 20-year patent term.
3) if objective was marketing approval anywhere in the world, the exception provision
allowed infringing acts of a significant extent, the extent of permissible activities was
out of the control of the Canadian authorities.
Conflict between
Section 55.2(1) and Article 30

20. Canada
Arguments
Section 55.2(1)
Regulatory
Review
Exception
 Normal exploitation
• “Exploitation" of the patent involves the extraction
of commercial value from the patent by "working"
the patent.
 by selling the product in a market from which
competitors are excluded
 or by licensing others to do so
 or by selling the patent rights
  none of these activities are deprived
• Section 55.2(1) does not conflict with
"normal exploitation”.
 It does not conflict with the patent owner's
exclusive marketing rights throughout the term of
the patent.
 Whether the “normal exploitation” contained the
additional period of the market exclusivity.
  Additional period should not be contained

21. Second requirement: Section 55.2(1) of the Canadian patent act conflicted
unreasonably with a normal exploitation of patents.
• "Normal exploitation" should be defined in terms of the market exclusivity of
patent owner.
• The market exclusive rights are the five fundamental rights which is expressed
in the article 28.1.
• But the section 55.2(1) disregarded all patent rights if the intention is to
obtain market approval.
Conflict between
Section 55.2(1) and Article 30

22. Canada
Arguments
Section 55.2(1)
Regulatory
Review
Exception
 Legitimate interest
• "legitimate" --“conformable to law, lawful, proper".
• “legitimate interests”--"relate to the rights and
duties that the patent laws confer or impose“
• A patent holder had a legitimate interest in
“working” the patent as a monopolist and earn
economic benefits during the term of protection.

23. Third requirement: Section 55.2(1) act unreasonably prejudiced the
legitimate interests of the patent owner.
1) Third parties has the same rights as the patent owners during the patent
period--- that is full enjoyment of legal rights which is only exclusive to the
patent owners.
2) 'Legitimate interests' of the patent owner can only be the full enjoyment
of his patent rights during the entire term of the patent.
3) The legitimate interest of third parties, the legal rights of the patent
owner's competitors should be the rights to make, use or sell the patented
product on the day after the patent expires. So during the patent period,
therefore, they have no legal rights to make or use (or sell) the patented
products during the term of patent period.
Conflict between
Section 55.2(1) and Article 30

24. Canada
Arguments
Section 55.2(1)
Regulatory
Review
Exception
 “Notwithstanding the private economic advantage
that would be obtained by doing so, a patentee
can have no legitimate interest deriving from
patent law in exercising its exclusive use and
enforcement rights within the term of protection to
achieve, through exploitation of regulatory review
laws, a de facto extension of that term of
protection beyond the prescribed period,
thereby unilaterally altering the bargain
between the patentee and society. In this
respect, the interests of a patentee of a
pharmaceutical invention can be no different from
those of patentees in other fields of technology.
• Section 55.2(1)did not impair a patentee's right to
bring infringement proceedings at any time during
the term of protection to restrain others from
making any commercial sale of the patented
invention


25. Panel’s Findings
Case of the regulatory review exception
 Is a ‘limited exception’ within the meaning of TRIPS Article 30
 There is no marketing regulation of the kind covered by Section 55.2(1), and
thus there is no possibility to extend patent exclusivity by delaying the
marketing approval process for competitors.
 It did not rest on a claim of interest in the ‘normal’ means of extracting
commercial benefits from a patent. Instead, it was a distinctive claim of
interest, resting on a distinctive situation applicable only to patent owners
affected by marketing approval requirements, asking for an additional means of
exploitation, above and beyond ‘normal exploitation’, to compensate for the
distinctive disadvantage claimed to be suffered by this particular group of
claimants.

26. • Article 27.1 emphasized the non-discrimination principle as to the place of
invention, the field of technology and whether products are imported or locally
produced.
• Section 55.2(2) is inconsistent with article 27.1.
• Because it treated holders of pharmaceutical patents less favourably than
holders of patents in all other fields of technology.
• Reasons:
• From the text of the law read as if its provisions would apply to all fields of
technology, it did in practice only applied to pharmaceuticals.
Conflict between
Section 55.2(1) and Article 27.1

27. 1) From the legislation history of this provision of Canada, other areas of
technology were not even mentioned.
2) Pharmaceuticals were the only products mentioned in Canada's 1991 legislative
debates on the enactment of sections 55.2(1).
From the two elements it imposes de jure discrimination against
pharmaceuticals.
3) Because the actual effects of section 55.2(1) are limited to pharmaceutical
producers, and these differential effects amount to a case of de facto
discrimination.
Section 55.2(1) only applied to
pharmaceutical products

28. Conclusion: it means that in pharmaceutical period, any person can make,
construct, use or sell the patented invetion only for development and submission
of information. It means that for other fields of technology, they cannot use
all the information of patented products in order to the requiring the market
approval. So for the pharmaceutical products, the patent ownerers are not
protected compared to other patented owners of other field.
Section 55.2(1) only applied to
pharmaceutical products

29. Canada
Arguments
Section 55.2(1)
is not
inconsistent with
Article 27.1
 Canada hold two defenses:
• the non-discrimination rule of Article 27.1 does
not apply to exceptions taken under Article 30.
• Canada argued that Section 55.2 (1) does not
discriminate against pharmaceutical products.
• whether Section 55.2(1) of the Canadian Patent
Act discriminates as to fields of technology?
•  the de jure scope of Section 55.2(1) is limited to
pharmaceuticals

30. Applicability of Article 27.1 to
Article 30 exceptions
 the anti-discrimination rule of Article 27.1 does apply to exceptions of the kind
authorized by Article 30.
 de jure discrimination: the EC had not presented sufficient evidence to raise
the issue in the face of Canada’s formal declaration that the exception of
Section 55.2(1) was not limited to pharmaceutical products.
 de factor discrimination: although the EC’s response to the Panel’s questions
indicated that it did intend to raise the issue of de facto discrimination, the EC
did not propose a formal definition of de facto discrimination, nor did it submit
a systematic exposition of the evidence satisfying the elements of such a
concept.
  The Panel concluded that the EC had not demonstrated that the provisions
of the Canadian Patent Act had a discriminatory effect limited to
pharmaceutical products.

31. Panel Report
 The 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

32. 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.
 At the DSB meeting of 23 October 2000, Canada informed Members
that, effective from 7 October 2000, it had implemented the DSB’s
recommendations.

33. Implications
 Article 30’s very existence amounts to a recognition that the definition
of patent rights contained in Article 28 would need certain
adjustments.
 The case played a decisive role in acknowledging the regulatory review
exception in patent law. The regulatory review exception enables a
generic producer to avoid undergoing the marketing approval process
after patent expiry, which will usually save him several years.
 The Panel’s decision became an important tool for generic
manufacturers to support their early entry into the market after patent
expiry, it is important to note that laws protecting the use of clinical
test data can interfere with the generic producer’s ability to reap the full
benefits of an existing regulatory review exception.