13th November 2002

RE: Art 31(f) – Para 6 problem

Dear Friends

I have prepared a note with reference to the Chairman’s informal note circulated in the context of the Mini WTO Ministerial Conference at Sydney on 14th Nov 2002. I believe that the points are of vital interests to the third world countries and require urgent consideration.

Art 31(f) is flexible treated as such by USA, France, UK and others –

Most of the important WTO Member Countries have, in their patent laws, treated Art 31 and its different requirements, including Art 31(f) – as flexible, or optional.

In this context, reference can be made to US statute – 28 USC 1498, French Patent Law Art (l) 613-16 ‘Crown Use’ provisions of UK Patent Act 1977 etc., (even after 1999 amendment for TRIPS compliance), and others, each of which is ex-facie non-compliant with or violative of Art 31 requirements. Such references apart from providing confirmation of flexibility of Art 31 provisions, also show that such other countries cannot object to other Member countries treating Art 31, and particularly Art 31(f), as flexible, and not as a mandatory obligation. It cannot be said that these countries can treat Art 31 as flexible for their own patent laws, but as mandatory for other countries.

I would request you to kindly consider these points independently, and if you agree, to have the matters which you consider significant and useful to be studied by other experts and placed on internet/website for circulation amongst all interested.

I shall appreciate your suggestions and observations. My postal and e-mail address and Tele. nos are set out below. A more detailed note with additional reference material is available and can be sent on email if desired.

With regards

N. B. Zaveri
Advocate

(Kindly note my new phone nos.
[Office] (91)- (022) 2266 3301 / 2266 3201 and
Fax: (91) – (022) 56359744 – Resi: (91) - (022) – 25163461

Add: Great Social Bldg, 5th Flr,
60, Sir. P.M. Road, Fort, Mumbai – 400 001
India

Attachments – General note on policy matters; Technical note on legal aspects and Extracts from Decisions of Supreme Court of India.

The following important points of vital public and national interests for people in developing and least developed countries – involving, among others, issues of fundamental human rights and freedoms guaranteed by UN Charter and International Conventions, Regional Treaties and Constitutions in some of the countries, require careful consideration in the context of the informal note suggesting few points for discussions circulated by the Chairman for the Mini Ministerial Meeting at Sydney on 14th November 2002.

1. There is no doubt or dispute - in fact EC has already admitted and confirmed as mentioned in the separate technical note (dt. 12.11.2002 attached) - that the requirement of Art 31(f) of supplies for domestic market is confined only to predominant part, and that exports are permissible in respect of non-predominant part. It is now accepted that the non-predominant part could be as much as 49.9% of total production.

2. In respect of the exports of non-predominant part, no terms and conditions – either substantive, procedural or otherwise - are prescribed by TRIPS.

3. Acceptance of the terms and conditions as suggested in the Chairman’s draft note would mean acceptance of onerous conditions and obligations for even the non-predominant part exports. In other words, the South Countries and generic industry would be giving up even the existing benefits.

4. Members obligation under Art 31(f) limited - As per existing Art 31(f) provisions while granting authorization, a Member country is only required to stipulate as a condition of such grant, that the authorization is given predominantly for the supply of the domestic market. There is no obligation on the Member to monitor or take any post grant measures to ensure compliance with this requirement.

5. As such any breach or non-compliance by a licensee would not be a cause for complaint or dispute under WTO/DS procedures. Any exports in breach of such requirement can only be treated as failure to abide by license conditions, and consequently not protected or covered by the license. At the highest this may give a cause for cancellation of license or may amount to infringement of the patent right, for which the government or the patentee may take action as per domestic law.

6. Infringement would only be a private litigation in domestic Courts between the patentee and the licensee, for which Art 44(2) of TRIPS, specifically permits relief to be prescribed by way of remuneration as per Art 31(h). This would enable keeping the door open for exports supplies, by providing for remuneration as per Art 31(h).

7. Accepting the suggestions as per Chairman’s note will mean acceptance of additional mandatory conditions and procedures at international level for information, verification, inspection, objections, delays, obstructions, and worse still, providing new causes of action for other Member countries and patentees to raise new disputes before WTO/DSB, even for the non-predominant part. Instead of solving Para 6 problem, we would be creating more problems, delays and obstructions.

8. We cannot ignore the fact that ensuring availability of drugs and medicines required for improving health standards and nutrition – particularly for prevention, control and treatment of infectious diseases like AIDS/HIV, Malaria, T.B. etc., in sufficient quantities and at affordable prices is accepted and declared to be a matter of human right obligation for all UN Member Nations under the UN Charter, Universal Declaration of Human Rights, International Convention on Human Rights as well as regional treaties and domestic laws. In a series of Declarations and Resolutions adopted during last two years at international conferences of UN General Assembly, WHO, UN AIDS, Human Rights Commission, this right and its primacy over trade rules including TRIPS, have been declared and confirmed.

9. This obligation is to be treated for the purposes of principle of Jus Cogens and Art 53 of Vienna Convention – (see note 12.11.2002) as a ‘peremptory norm of general international law from which no derogation is permitted’. As such it overrides all the trade rules, including the requirements under Art 31(f) of TRIPS. It is therefore not permissible for the government or the nation to accept any obligation which takes away or compromises with these obligations or duties.

10. In this context, reference may be made to some of the decisions of the Supreme Court of India on the human rights – right to life, right to better standard of living, right to healthcare, right to employment, as provided and guaranteed by the UDHR and International Treaties and Law on Human Rights, and more particularly on the obligations of Member Countries under such International Treaties. There are also similar decisions of the European Court and UK Courts.

11. Few special concessions are being offered to the least developed countries – as was also done for Doha Declaration – to ensure that they do not take an independent view or support the developing nations. However, it would be necessary to convey to LDCs that the entire system is being designed to make them totally and perpetually dependent on the supplies from developed countries and patent holders, which are bound to be at higher costs when generic competition is excluded