Para 6 Solution of the Doha Declaration, Article 30 of TRIPS and
Non-Prohibition of Exports under the TRIPS Agreement
DAYA SHANKER / University of Wollongong
9feb03
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Abstract:
This is an analysis of the position of export in the TRIPS Agreement in terms of the patenting provisions in various countries particularly in the USA and the EC because of its direct relevance to the solution of para 6 of the Doha Declaration. The analysis suggests that there was no loophole as insisted by the USA in the TRIPS Agreement regarding absence of provision of permitting export to the countries which do not have significant manufacturing capacities. The article starts from discussing that presence of Article 31(f) of TRIPS stipulating that manufacture under compulsory licensing is predominantly for domestic market cannot be read as affecting the whole of the TRIPS Agreement. The analysis of patent acts of various significant players in the field of intellectual property such as the US, the EC and Japan in terms of judicial decisions ranging from various judgments of the US Supreme Courts and other relevant courts apart from the TRIPS Agreement confirms that the patenting is territorial which resolves into absence of any patenting monopoly on export of patented products. The analysis also confirms that the related measures like “making” and “offer to sell” are also not covered by the patenting rights as mentioned in Article 28.1 of the TRIPS Agreement and different patenting provision of different Western countries as exclusion of “making” under patenting monopoly has never been regarded as absolute or total. The patenting monopoly on “making” has always been interpreted as “making for commercial purpose in the territory of the patent.” While discussing the prior art under section 102(a) of the US Patent Act, Federal Circuit refused to invalidate patent on Ricoseal that the circulation of this product to different parties would not constitute prior art as it was not circulated for commercial purposes.
Apart from the judgment of the US Supreme Court, the presence of exclusion rights covering export in UPOV and the introduction of 271(f) in the US Patent Act to prevent the export of components to be assembled where the total product would violate the US Patent act confirm that had there been a ban on export in the TRIPS Agreement, it would have been explicitly present as one of the rights of patent holder in Article 28.1 of the TRIPS Agreement. While introducing section 271(f) in the US Patent Act prohibiting export of components, the export of patented products was not banned. The assertion of the USA that permitting export of patented products to satisfy the requirements of compulsory licensing raises a very important issue whether a country can introduce in international negotiations the provisions which are not present in its own domestic law and whether such introduction amounts to extra-constitutional method of changing or introducing an amendment in the domestic law. During the TRIPS negotiations, the USA using the proposals from the EC, extended patenting monopolies to “import”, “offer to sell” and the period of “patenting to 20 years” as part of its “obligations” and “commitments” to comply with the TRIPS Agreement through URAA. During the argument leading to the changes in its Patent Act through URAA, the USA insisted, that the TRIPS agreement was a product of Arthur Dunkel’s draft prepared in 1993. The letter from EC Trade Commissioner Brettan to the US Congress suggests that there was a very close cooperation between these nations to extend the patenting monopolies during the TRIPS negotiations. In the context of para 6 of the Doha Declaration solution, the EC initially proposed use of Article 30 of the TRIPS Agreement to permit export of patented product to fulfill the requirements of Article 31 among a number of suggestions. However, the USA from the beginning insisted that Article 30 of TRIPS does not permit export of patented products even under Article 30 exemptions. The interpretations of various courts both in the USA and the EC confirm that the patenting provision is totally territorial and it would not cover prohibition on export of products without even resorting to any use of exemption under Article 30 of the TRIPS agreement.
The analysis also suggests that although both the USA and the EC have passed specific legislations to remove direct effect of the WTO Agreement in spite of presence of Article XVI:4 of the GATT 1994 and Article 23.2(a) of the DSU requiring compliance of their rules, regulations and administrative orders with the GATT provisions and the reports of the Panel and Appellate Body, the provisions introduced at the behest of the USA and the EC have been treated to have binding effect on the domestic legal system thereby using their duopolistic power and influence at international treaty negotiations to introduce provisions in its domestic law directly or indirectly which can only be labeled as extras-constitutional.
The simple proposal from the developing countries in the Draft Ministerial Declaration[1] that the nations with insufficient or no capacity to manufacture the patented product should be permitted to import the patented product took a controversial turn at Doha when the issue was referred to the Council for TRIPS for an “expeditious solution” vide Para 6 of the Doha Declaration[2] which states
: “We recognize that WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the general council.”
A number of proposals were put forward by the EC[3], the USA[4], Brazil on behalf of the Developing countries[5], Kenya on behalf of the African Group[6] and the UAE[7]. The proposals were also suggested by few academics such as Abbott[8], Sykes[9] and Attiran[10] and even ex-prime Minster of Sweden[11] which were all revolving around the concept that the patenting monopoly also extends to the export of the patented product[12] although Brazil did point out that Article 28.1 of the TRIPS agreement does not contain any such restriction.[13]
It appears that the arguments by both developing countries and developed countries are based on the assumption that the TRIPS Agreement prohibits exports. There is a related argument that if Article 28.1 does not provide export as suggested by developing countries but since it prohibits “making” by third parties, the patented products cannot be manufactured for export. This argument works on the assumption that the prohibition on making in the patent acts is total and absolute. The extension of patenting monopoly to export in the TRIPS Agreement appear to have been suggested on the basis of Article 31(f) of the TRIPS Agreement which in the context of compulsory licensing says that patented products manufactured should be predominantly for domestic market.
The legal analysis below suggests that both the arguments are not based on correct understanding of the law either by the developed countries or by the developing countries. The examination of various existing legal provisions and their judicial interpretations shows that the export of the patented product has never been envisioned by the patenting acts as extending the patenting monopoly to the existing patent acts including those of the USA and the EC. The analysis also suggests that patenting monopoly of excluding others from “making” or “offering for sell” would not be covered either by “making” for export or “offering for sell”” in the importing country in view of the fact that patenting provisions of excluding others from making has always been regarded by the judiciary as “making” for commercial purpose in the territory of patent. The non-application of monopoly on export is based on the fundamental tenet of territoriality of the patent. Any manufacture which would not be for commercial exploitation or profit in the territory of the patent would not be violating the patent rights. The territoriality of the patent has been a fundamental tenet in the TRIPS Agreement vide incorporation of Article 4bis of the Paris Convention[14] in the TRIPS Agreement as well as in the existing patent acts of the major players.
The USA did try to introduce extraterritoriality in its patent act by introducing Section 271(f) to overrule part of the judgement by the US Supreme Court in Deepsouth Packing[15] but again the interpretation by the US Courts have been that Section 271(f) is applicable only for components of patented assembled invention which when assembled abroad would violate the patenting provision in the USA.[16] Similarly “offer for sell” has been interpreted as offer for those sells which would constitute infringement in the territory of the patent.[17] The proposal of the developing countries to permit export of the patented product under Article 30 of TRIPS has essentially been an assertion of long standing legal validation on the line of other proposals such as the use of object and purpose in international treaty interpretation. The freedom to export patented product was not a loophole but has been an integral part of the national patent laws and international treaties dealing with patenting monopolies.
The US proposal that Article 30 exemption would not permit export under the TRIPS Agreement raises a very pertinent issue in international treaty negotiations whether a country can raise an issue or a provisions in international treaty negotiations when that provision is not present in its own national patent acts because it would amount to amending the national provisions through the use of international treaty negotiations particularly when the USA and the EC enjoy position of imposing unilaterally its will on the other members of the WTO. It also raises a very pertinent issue that the countries where the international agreement is binding as in many EC Member countries such as UK and the USA, the attempt to introduce provisions overruling their acts through introduction of provisions or interpretations through the international treaty agreements would not amount to violation of the law making process either through the parliament as in the UK or of Constitution as in the USA. The analysis suggests that introduction of provisions in the international treaty negotiations which becomes binding on such countries as per the law of their land is essentially in violation of their Constitution and other law making procedures.
There is nothing in the TRIPS Agreement to suggest that the export for the patented products is prohibited. The continuous reference by the USA, the EC and academics like Abbott to Article 31(f) of TRIPS suggests that the contents of Article 31(f) saying that “any such use (Other use Without the authorization of the Right Holder) shall be authorized predominantly for the supply of the domestic market of the member authorizing such use” is being interpreted as total prohibition of export under the TRIPS Agreement. This interpretation that since compulsory licensing under Article 31 of TRIPS permits manufacture only for the domestic purpose also appear to be buttressed by Article 31(k) of the TRIPS Agreement dealing with compulsory licensing granted in case of anti-competitive effect of the patent which says that “members are not obliged to apply the conditions set forth in subparagraphs (b) and (f) where such use is permitted to remedy a practice determined after judicial or administrative process to be anti-competitive.”
The question arises whether a condition incorporated in the special case of compulsory licensing to be issued in specific situations can be applied to the whole of the TRIPS Agreement. The phrase ‘predominately for the supply of the domestic market” cannot be construed as suggesting that the entire TRIPS Agreement is to be read as prohibiting manufacture or making for export.
There are two aspects to the analysis. One is accepting the stipulation of the patent act as it is, is there any restriction on the export of patented products by non-patent holder. The second consideration is whether the present exemption to patent protection covered under Article 30 of TRIPS prohibits export of the patented product although there is no exclusion of export either in the TRIPS Agreement or in the Patent Acts of major countries supporting extension of patenting monopoly to export, there are three major exclusions in the TRIPS Agreement which may be interpreted as restricting export. These are “making”, “selling” and “offering for sale”. While excluding the right of making and selling was present in the US Patent Act, the TRIPS Agreement was apparently given as a reason to introduce “offer to sell” as one of the exclusionary activities in the US Patent Act. The analysis below would cover the issues mentioned above and analyze the question whether the law existing in these countries would prohibit export of the patented products.
The analysis is based on judicial institution’s pronouncements in the USA and the members of the EC and judicial decisions in other countries. Although the EC is going through a process of total fluidity and uncertainty as is evident from the Advocate Generals’ reliance on the US Supreme Court’s decision in v. Diamond v. Chakrabarty[18] a decision interpreting the US Congress’s preparatory document to support EC’s Biotechnological Directive 98/44 imposed on the members.
Article 31(f) of TRIPS and Export
Abbott[19] in his various articles while dealing with the issue of export to fulfil the requirements of nations having issued compulsory licensing argued extensively on the basis that Article 31(f) of the TRIPS saying
“any such use (Use Without Authorization of the Rights Holder) shall be authorized predominantly for the supply of the domestic market of the member authorizing such use” as implying that export under the TRIPS Agreement is permitted only under this provision and possibly under Article 31(k) of the TRIPS Agreement and that this exemption which is not because of the anti-competitive activities, shall be mostly for domestic purpose and only non-dominant part of which can be exported. The basic flaw in such argument is that Article 31(f) is limited only to “Other use without Authorization of the Right Holder” and has no relevance outside of Article 31 of the TRIPS agreement.
Normal legal understanding suggests that the ban on dominant part of export is confined to products manufactured under compulsory licensing and not to the entirety of the TRIPS Agreement. Similar case came up before House of Lords in Parke Davis & Co. v. Comptroller-General of Patents, [1954] A C 421 pertaining to the application of the conditions in the compulsory licensing to the totality of the UK Patent Act and to the Paris Convention. Section 45(3) of the UK Patents Act, 1949, provided
“No order shall be made in pursuance of any application under section 37 to 42 of this Act which would be at variance with any treaty, convention, arrangement or engagement applying to the United Kingdom and any Convention country.” Sections 37 to 42 of the UK Patent Act, 1949 dealt with issue of compulsory licenses. Section 37 enabled any person interested to apply to Comptroller for authority to exercise the patent monopoly on a number of grounds, all of which were related to the patentee’s own exercise or non-exercise of his monopoly. Section 41 of the UK Patent Act, 1949 dealt with right to a compulsory licence not because of patentee’s exercise or non-exercise of his monopoly, but solely on account of the character of the invention, i.e. if the patent was in respect of - (a) a substance capable of being used as food or medicine or in the production of food or medicine; or (b) any invention capable of being used as or as part of a surgical or curative device. Section 41 of the UK Patent Act was different from Sections 37 and 40 of the UK Patent Act, 1949 as no restriction of three years was placed on the time at which application can be made. Parke Davis contended that Article 5A of the Paris Convention for the protection of Industrial property, 1934, “was one of international obligations which were attracted by the subsection to all applications for compulsory licenses to work patented inventions, with the result that it protected the patentees in all cases, on whatever ground the compulsory license was sought, for an initial period of three years, since Article 5A(4) as translated provided: In any case, an application for the grant of a compulsory licence may not be made before the expiration of three years from the date of the issue of the patent …” This proviso is still applicable in the Paris Convention (Stockholm) and is part of the compulsory licensing under Article 5(A) of the Paris Convention dealing with compulsory licensing because of abuse of patent by patent holder and has been incorporated in the TRIPS Agreement vide Article 2.1 of the TRIPS Agreement.[20] The 1934 Paris Convention differs in a minor respect with the Paris Convention in 1967 incorporated in the TRIPS Agreement, but the discussion is equally relevant in the context of the TRIPS Agreement.[21] The Comptroller General of Patents the UK decided that Article 5A of the Paris Convention related to compulsory licenses granted on the ground of abuse by the patentee of the monopoly rights granted to him and had no reference at all to the special class of compulsory licenses under Section 41 of the Patent act, 1949 exempting inventions relating to food or medicine. The exemption given to food and medicines was a part of the public policy. In fact, the argument by counsel for Parke Davis brought out these facts in greater detail. He said, “The argument favored in the courts below was that there is a distinction between compulsory licenses granted on the ground of abuse and compulsory licenses independent of it. This was based on a contrast between sections 37 and 41 of the British Patent Act but the wide conception of abuse apparent in section 6 of the Statute of Monopolies, 1623 (21 Jac. 1, c.3), shows that it does not necessarily relate to people’s actions and that what is regarded an abuse of public interest than faulty conduct by the patentee. Sections 37 and 41 of the Act of 1949 both deal with public policy and it cannot be said that one is concerned with abuse and the other wholly divorced from it. … Under section 37, the patentee must show that there was no abuse or prejudice to public policy. Under section 41, he must show that there is good reason for refusing the application, and that must include showing that there is no abuse; under that section one can consider abuse more widely than under the other.”[22] In simple terms, what the counsel for Parke Davis was arguing was that any prejudice to public policy such as granting of patent for medicines and food would be covered by the term abuse under Article 5A of the Paris Convention and as such would bring the conditions of three years waiting period before compulsory licenses could be issued. The issue was formulated by Lord Asquith, the relevant part of which reads as
“(4) The point for decision is therefore whether an order made under section 41, and therefore (if I am right so far) not made on the ground of an “abuse of patent rights,” is invalidated by Article 5A of the 1934 Convention.
(5) It accordingly becomes crucial to decide whether article 5A is limited to orders made on the ground of “abuse”: or extends to orders made on other grounds; which other grounds alone, in my view can be entertained under section 41.”[23]
Interpreting the phrase “In any case” (“En tout cas”) in Article 5(A)(4) of the Paris Convention which was used as providing generality of application to the subarticle 5(A)(4) of the Paris Convention, the Court noted is to be read as “applying to situations ejusdem generis with those to which the earlier subarticles of Article 5A apply, is clearly directed (and limited) to objectionable conduct on the part of patentee paraphrased as “abuse”. Lord Asquith observed ““In any case” means “in any such case.” The change in language of the Paris Convention in 1934 Convention and 1925 Convention was the introduction of phrase “in any case” and such change of language was found to be “such as was inevitable consequence of introducing the two years’ period of grace between granting of the first compulsory license and the institution of any proceedings of revocation.” Lord Cohen approvingly quoted from Jenkins L.J. ([1953] 2 Q.B. 48, 64; [1953] 2 All E.R. 137) “ … reading Article 5 of the Convention of 1934 as a whole, and giving the best consideration I can do to the various indications as to its meaning to be extracted from the language used, it seems to me that it is reasonably plain that this article is referring simply to measures, whether by way of grant of compulsory licence or revocation, to prevent abuses of monopoly rights, and has no reference at all to the special provisions of the English translation, under which a compulsory licence may be granted in respect of substances capable of being used as food or medicine.”[24]
Article 31(f) of the TRIPS Agreement starts with the phrase “such use” which has been interpreted by the House of Lords in Parke Davis as referring only to Article 5(A) of the Paris Convention and in this case would be referring to only “Other use Without Authorization of the Right Holder” i.e. only to those compulsory licenses which has been granted under Article 31 and under no other provisions of the TRIPS Agreement. In fact the phrase “such use” has been used in each and every sub-article of Article 31 of TRIPS starting from Article 31(a) to Article 31(g) and to Article 31(l). Article 31(f) of the TRIPS Agreement cannot be read as prohibiting export of patented products outside of Article 31 to entirety of the TRIPS Agreement.
The public interest was also discussed in Germany in “Zwangslizenz”[25] by the Supreme Court in relation to the Paris Convention. The case of ‘Polyferon” was argued by the plaintiff that a public interest in terms of Section 24(1) by insisting that it is applicable only if the patentee abuses its exclusive position. Article 5A was interpreted as merely granting a compulsory licensing in case of failure to work or insufficient working of the invention, not, however, compulsory licensing in consideration of public interest. The national legislators were free to prescribe other reasons, especially public interest considerations for the grant of compulsory licensing. While dealing with Article 30 of TRIPS, the German Supreme Court observed that such exceptions do not deal with a patent abuse.[26]
Export as Patented Monopoly and Judicial Decisions
The fact that export of patented products is not covered by the TRIPS Agreement is evident from a number of decisions of the US courts ranging from the US Supreme Court to the Court of Appeals for the Federal Circuit both before and after the TRIPS Agreement which in view of the territoriality of the patent acts has made it clear that export of the patented products does not constitute any violation or infringement of the US Patent Act, the UK Patent Act or the Japanese Patent Act. The non-extension of patenting monopoly to the exports had two aspects: one pertains to the absence of the term “export” in the rights granted to the patent holder as observed in Deepsouth, and the other pertains to the territorial nature of the patent acts both as existing in the patent acts of the major players and the TRIPS Agreement. The TRIPS Agreement while being drafted had been prepared under direct influence of the industry lobby groups[27] and contained more stringent features than were present in the patent acts of the countries such as the USA[28] and the UK[29] but even then Article 28.1 did not extend the patenting monopoly to export and Article 4.2bis of the Paris Convention reiterates the position that patenting is totally territorial in nature. In Deepsouth, the US Supreme Court clarified the territoriality of the US Patent act. While dealing with extension of patenting monopoly to export the US Supreme Court observed
“We disagree with Court of Appeals for the fifth Circuit. Under the common law the inventor had no right to exclude others firm making and using his invention. If Laitram has a right to suppress Deepsouth’ export trade it must come from its patent grant, and thus from the patent statute. We find that 35 U.S.C. 271, the provisions of the patent laws on which Laitram relies, does not support its claim.”[30]
The TRIPS Agreement essentially with few exceptions such as compulsory licensing was a reproduction of the US Patent Act. The interpretation of the US Patent act dealing with attempted extension of monopoly to export by the US Supreme Court as observed in Dowagiac Mfg. Co. v. Minnesota Moline Plow Co. (235 U.S. 641(1913)) is
“Some of the drills, about 261, sold by the defendants were sold in Canada, no part of the transaction occurring within the United States, and as to them there could be no recovery of either profits or damages. The right conferred by a patent under our law is confined to the United States and its territories (Rev. Stat. S. 4884), and infringement cannot be predicated of facts wholly done in a foreign country.”[31] This was followed by the Supreme Court in Deepsouth Packing v. Laitram 406 U.S. 518 where the US Supreme Court observed that ‘The statute makes it clear that it is not an infringement to make or use a patented product outside of the United States, 35 U.S.C. 271. See also Dowagiac Mfg. Co. v. Minnesota Moline Plow Co., 235 U.S. 641, 650 (1915) Brown v. Duchesne, 19 How. 183 (1857) Thus, in order to secure the injunction it seeks, Laitram must show a 271(a) direct infringement by Deepsouth in the United States, that is, that Deepsouth “makes”, “uses” or “sells” the patented product within the bounds of this country.[32]” In conclusion, the US Supreme Court further observed
“In conclusion, we note that what is at stake here is the right of American companies to compete with an American patent holder in foreign markets. Our patent system makes no claim of extraterritorial effect; “these acts of Congress do not, and were not intended to operate beyond the limits of the United States,” Brown v. Duchesne, 19 How. at 195; and we correspondingly reject the claims of others to such control over our markets. Cf. Boesch v. Graff, 1q33 U.S. 697, 703 (1890). To the degree that the inventor needs protection in markets other than those of this country, the working of 35 U.S.C 15 and 271 reveals a congressional intent to have him seek it abroad through patents secured in countries where his goods are being used. Respondents hold foreign patents; it does not adequately explain why it does not avail itself of them.[33]”
The most important observation was made by the US Supreme Court in Brown v. Duchesne (60 U.S. 183) where a ship having parts patented in the USA entered the US ports. The US Supreme Court held that
“The patent laws are authorized by that article in the Constitution which provides that Congress shall have power to promote the progress of science and useful arts, by securing for limited time to authors and inventors the exclusive right to their respective writings and discoveries. The power thus granted is domestic in its character, and necessarily confined within the limits of the United States. It confers no power on Congress to regulate commerce, or the vehicles of commerce, which belong to a foreign nation, and occasionally visit our ports in their commercial pursuits. That power and treaty making power of the General government are separate and distinct powers from the one of which we are now speaking, and are granted by separate and different clauses, and are in no degree connected with it. And when Congress are legislating to protect authors and inventors, their attention is necessarily attracted to the authority under which they are acting, and it ought not lightly to be presumed that they intended to go beyond it, and exercise another and distinct power, conferred on them for a different purpose. Nor is there anything in the patent laws that should lead to a different conclusion. They are all manifestly intended to carry into execution this particular power. They secure to the innovator a just remuneration for those who derive benefits or advantage, within the United States, from his genius and mental labors.”[34]
If there was any doubt left about the right of the patent holder to gain advantage or profit from foreign sells, it was removed by the Supreme Court by its subsequent observation and since so much of arbitrary claims are being made by a group of academics, I am quoting from the judgments to avoid leaving any doubts. It says
“But these acts of Congress do not, and were not intended to, operate beyond the limits of the United States; and as the patentee’s right of property and exclusive use is derived from them, they cannot extend beyond the limits to which the law itself is confined. And the use of it outside of the jurisdiction of the United States is not an infringement of his rights, and he has no claim to any compensation of the profit or advantage he may derive from it.[35]”
The US Court of Appeals for the Federal Circuit (CAFC) which many believe[36] was established to expand the monopoly of the patent holder and which definitely has been working on this line however thought it prudent not to extend the monopoly under the patent right to foreign trade. In John Hopkins University v. Cellpro (152 F.2d 1342) in 1998 i.e. after the TRIPS Agreement, the CAFC specifically observed
“Neither export from the United States nor use in a foreign country of a product covered by a United States patent constitutes infringement (See 35 U.S.C. s. 271(a) (1994) (“Whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefore, infringes the patent.”); see also Paper Converting Mach. Co. v. Magna-Graphics Corp., 745 F.2d 11, 16 (Fed Cir. 1984) (“By the terms of the patent grant, no activity other than the authorizer making, using or selling of the claimed invention can constitute direct infringement of a patent, no matter how great the adverse impact on economic value of a patent.”)” CAFC in John Hopkins also observed that “However, to the extent that Hopkins complaints that CellPro’s infringement has damaged its ability to serve foreign markets Hopkins must rely on foreign patent protection. See Deepsouth, 406 U.S. at 531 at 774.[37]”
In Trustees of Columbia University in the City of New York v. Roche Diagnostics, US Courts for the District of Massachusetts (150 F. Supp. 2d 191), the US District Court using Deepsouth and John Hopkins University v. CellPro, Inc. 152 F.3d 1342, 1366 (Fed. Cir. 1998) decided that “Columbia’s conception of liability equates infringing activities that occur abroad with infringing activities that occur within the U.S. However, this reading simply does not accord with the plain reading of the statute. Section 271(a) refers explicitly to infringing activities that occur within the United States. The mere ownership by a domestic actor of the products used to infringe abroad does not relocate the infringing activities to U.S. soil[38]”
In Fausett (Kirk A. Fausett, et al., v. Pansy Ellen, Inc. 1990 U.S. Dist. Lexis 19373; 19 U.S.P.Q.2D (BNA) 1228), the discussion was little different from actual export as the goods were manufactured abroad but were imported and stored for export i.e. the import took place not for introduction into US commerce but for the purpose of introduction in foreign commerce where the patenting monopoly of the national patent act would not be applicable. The patented products were manufactured in Taiwan and stored in USA from where they were exported.
The court observed that “Plaintiff do not provide the Court with any guidance concerning proper construction of 35 U.S.C. s. 271(a). They merely assert that storage within the United States and shipment of the Pet Net hammock from this country constitute sale within the United States. The Court concludes that defendants have the better of his argument for several reasons. First, if the Congress had intended the patent laws, to apply to products manufactured abroad but stored in the United States prior to export, it could have included such language in the statutes. As written, those laws apply to manufacture and sale within the United States and do not contain language addressing products manufactured and sold outside the United States, albeit for an American company. Second, the construction implicitly urged by plaintiffs would impose liability on American companies for activity that would fall outside the ambit of the patent laws if their headquarters and warehouses were located in another country. The court is not aware of any reason American companies should labor under this type of competitive disadvantage. Likewise, the court sees no basis for adopting a construction of the patent laws that would encourage American companies to relocate abroad.”[39]
In Robotic Visions Systems, Inc. v. View Engineering, Inc. (1995 U.S. Dist. Lexis 21171; 39 U.S.P.Q. 2D (BNA) 1117), RVSI argued that citation of Dowagiac is wrong in view of the fact that it was decided 70 years before s. 271(g) was enacted. However, the RVSI couldn’t cite any case supporting their position that on these facts a sale made outside the US falls within the purview of the statute. The Court observed that “Unless View (View Engineering Inc.) uses or sells the Model 880s in the U.S., View does not violate the patent statute. If the hoods are shipped out of the country and the sales transactions takes place completely outside of the U.S., then the patent statute does not reach the transaction. See Dowagiac, 235 U.S. at 650 (“The place of sale is therefore of controlling importance here.”) RVSI seeks to prevent export of the nine Model 880s prior to the effective date of the patent. 35 U.S.C. 283 provides that a district court “may grant injunctions in accordance with the principles of equity prevent the violations of any right secured by patent, on such terms as the court deems reasonable.” It appears that this court does not have authority to enjoin an activity (export) that is not an infringement concerning goods that, unless used or sold in the United States, are not infringing. Consequently, RVSI fails to show likelihood of success on the merits of this issue.”[40] (p.6).
Although Deepsouth was partially overruled by US Congress in 1984 by adding an additional type of infringement through incorporation of s. 271(f), the court in Robotics Vision did not find any new definition for ”make”, “use” or “sell” beyond Deepsouth’s interpretation of those terms. (Hughes Aircraft Co. v. United States, 29 Fed. Cl.197, 218 (1993).
In Enpat v. Microsoft Corp. (6 F. Supp. 2d 537 decided on May 22, 1998), the court observed that
“Clearly had Congress intended to prohibit U.S. Companies from exporting products which allow foreign companies to make unauthorized use of patented methods it could have done so in clear, unambiguous language like that found in s. 271(g). Instead, we agree with Microsoft that the language and legislative history of s. 271(f) demonstrate an exclusive focus on the sale of components patented in the United States for combination into a finished product, apparatus, or invention abroad.”
The absence of monopoly on export for the patented products is also supported by series of decisions by the judicial courts stating that while determining reasonable royalty in case of patent infringement, the sales abroad would not be taken into account. In Sutton v. Gulf Smokeless Co., 77 F.2d 439 (4th Cir. 1935), the Fourth Circuit observed
“Coming to the award of damages in the sum of $, 7,145.56 with respect to the 18 tables as to which complainants elected to take general damages, we observe first that any damages with respect to the tables sold for foreign use must be eliminated. The claims of the patents relied on are process claims, and no use of the process in a foreign country would constitute an infringement; for in such case there is no infringement to which such manufacture and sale could be contributory. “Contributory infringement can only arise in this country when somewhere and somehow in this country there is a completed infringement to which a contribution can be made.” Computing Scale Co. v. Toledo Computing Scale Co. (C.C.A. 7th) 279 F. 648, 678; Bullock Electric & Mfg. Co. v. Westinghouse, etc. Co., (C.C.A. 6th) 129 F. 105)”[41]
Similarly in Amstar Corp. v. Enviro Tech Corp.[42] Federal Circuit affirmed the District Court’s denial of damages for foreign sales because such sales did not infringe the patent. In Enpat v. Microsoft, again the court relying on Sutton, observed “… we find that Microsoft cannot be required to pay damages for foreign sales, which do not violate United State’s patent laws. Moreover, while we recognize that the determination of a reasonable royalty envisions a hypothetical license negotiation between the infringer and the patent owner using factors delineated in Georgia Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116, 1119-20 (S.D.N.Y. 1970), none of those factors support a conclusion that Microsoft would pay for the right to engage in foreign sales it already has a legal right to make. Accordingly, we conclude that Microsoft’s foreign sales may not be taken into account in any determination of a reasonable royalty.”[43]
Similar findings were made by New York District Court in Aerogroup International v. Marlboro 955 F. Supp. 220.[44]
The most important finding regarding export as non-infringing act has been discussed in Chartex[45] where the District Court determined that MDPP’s overseas business arrangements did not constitute infringement. The CAFC observed that
“The district court determined that MDPP’s overseas business arrangements did not constitute infringement. SEE Chartex, NO. C-90-3622-CAL, slip op. At 7-9. Making arrangements to have a device manufactured overseas for making arrangements to have it imported into a foreign country is neither an infringing “making,” “using,” or ”selling” of the invention within the United States. SEE 35 U.S.C. s. 271(a). Moreover, ass the District court correctly noted, preparation to infringe does not constitute infringement under section 271(a). Laitram Corp. v. Cambridge Wire Cloth Co., 919 F.2d 1579, 1583, 16 USPQ2d 1929, 1932 (Fed. Cir. 1990), cert. Denied, 113 S. Ct. 97 (1992); see also Eli Lilly & Co. v. Medtronic, Inc. 915 F.2d 670, 673, 16 USPQ2d 2020, 2023 (Fed. Cir. 1990); Lang v. Pacific Marine & Supply Co., 895 F. 2d765, 13 USPQ2d 1820, 1823 (Fed. Cir. 1990). Therefore, the overseas business arrangements do not constitute infringement under the Patent Act.”[46]
The number of judgments regarding the interpretation of patent rights specifically excludes export from the patent rights and since the TRIPS Agreement is based on similar structure, the patent rights cannot be construed to include export. Article 31(f) of TRIPS in view of discussion by the House of Lords in Parke Davis, is applicable only to the patented products produced under Article 31.
The non-presence of monopoly extending to export in various patent acts as well as in the TRIPS Agreement also derives support from the Plant Variety Protection Act of 1970 (PVPA) where the patenting monopoly has specifically been extended to export and from s. 271(f) of the US Patent Act. The PVPA reads as
“Except as otherwise provided in this subchapter, it shall be an infringement of the rights of the owner of a novel variety to perform without authority, any of the following acts in the United States, or in commerce which can be regulated by Congress or affecting such commerce, prior to expiration of the right to plant variety protection but after either the issue of the certificate or the distribution of a novel plant variety with the notice under section 2567 of this title:
“(1) sell the novel variety, or offer it or expose it for sale, deliver it, ship it, consign it, exchange it, or solicit an offer to buy it, or an y other transfer of title or possession of it;
“(2) import the novel variety into, or export it from, the United States;
“(3) sexually multiply the novel variety as a step in marketing (for growing purposes) the variety; or
“(4) use the novel variety in producing (as distinguished from developing) a hybrid or different variety therefrom; or
…
“(8) instigate or actively induce performance of any of the foregoing acts.”
The territoriality and non-application of patenting provision to export has also been discussed by Japanese Supreme Court.
In this case Japanese Supreme court affirmed a Tokyo District Court’s decision denying an injunction and claims for damages against a defendant who was accused of inducing infringement of US Patents by manufacturing and exporting infringing products where the US patentee did not have a Japanese patent covering the product. The question of territoriality has been discussed in and confirmed that granting an injunction based on US Patent law conflicts with the Japanese Patent law’s principal of territoriality. “No international agreement requires Japanese courts to recognize the exclusive rights of a US Patent.”[47] The Japanese Supreme Court concluded that granting an injunction based on a provision of US patent law conflicts with public policy under Article 33 of Horei. (Art 33 provides in case the law of a foreign country is to govern, the application of the provision of such law is contrary to the public policy or good morals, those provisions shall not apply). The continuing reiteration in the Japanese Supreme Court’s decision was that neither Japanese patent law nor international agreements provide for infringement, acts of inducing infringement are legal. Horei (Law concerning Application of Laws in General; Nationality Law concerning State Liability for Compensation, Habeas Corpus Acts etc. of Japan, Law No. 151 of 1999.) Horei prevents the application of a foreign law if the act is unlawful only in a foreign country and is not proscribed under Japanese law. (Art. 11, para 2).
The absence of export from the patent acts of all the major practitioners of patents as well as from Article 28.1 of the TRIPS Agreement confirms that export as a process of sending the goods as well as actual sell of the patented product outside of the US patent territory would not constitute infringement.
The Concept of “Make” in Patent Acts and Export
The export of patented products can be questioned on the express reading of the term “make” or its resolution into “use” in the TRIPS Agreement. An examination of the term “make” through various judicial interpretations discussed below shows that the patenting monopoly on “make” is not an absolute one and a prohibition on make has never been regarded as total and the term “make” in the patent acts has always been interpreted as “making of the patented product for commercial exploitation in the territory of the patent.”
In Microchem v. SmithKline & French [1972] S.C.R. 506, the Canadian Supreme Court while dealing with alleged patent infringement observed that since the alleged patented medicines had “never entered into commerce so that no damage was suffered by plaintiff and no profits made by the said defendant as a result of these experiments”, they would not constitute infringement. While discussing the decision of Walsh J.[48] that small amount kept of trifluoperazine which never entered into commerce and no damage was suffered by respondent and no profit was made by Micro, the Canadian Supreme Court observed “In my view he was in error in holding as he did that an experimental user without a licence in the course of bona fide experiments with a patented article is in law an infringer. The reasoning of Jessel M.R. in Frearsono v. Loe ((1878), 9 Ch. D. 48) and approved by Vice-Chancellor Bristowe in Procter v. Bayley & son ((1889), 6 R.P.C. 106 at 109) is applicable. Jessel M.R. said at pp. 66-67:
“The other point raised was a curious one, and by no means free from difficulty, and what occurred with regard to that was this, that the defendant at various times made screw blanks, as he said, not in all more than 2lbs., by various contrivances by which no doubt crew blanks were made according to the Plaintiff’s patent of 1870, as well as that of 1875; they seem to have been an infringement of both. He said he did this merely by way of experiment, and not with the intention of selling and making use of the thing so made for the purpose of which a patent has been granted, but with the view of improving upon the invention the subject of the patent, or with the view of seeing whether an improvement can be made or not, that is not an invasion of the exclusive rights granted by the patent. Patent rights were never granted to prevent persons of ingenuity exercising their talents in fair way. But if their be neither using nor vending of the invention for profit, the mere making for the purpose of experiment, and not for a fraudulent purpose, ought not be considered within the meaning of the prohibition, and if it were, it is certainly not the subject for an injunction.[49]”
The reason Walsh J. gave for regarding such experimentation as infringing was that Micro’s experiment were not carried out for the purpose of improving the process but to enable Micro to produce it commercially as soon as the license it had applied for could be obtained. Canadian Supreme Court observed that “I cannot see that this sort of experimentation and preparation is an infringement. It appears to me to be the logical result of the right to apply for a compulsory license. While it may not be necessary in each case to be in a position to show capacity to manufacture, it is, I think, a reasonably prudent thing for an applicant to be able to do so. It is true, as Thurlow J. said in Hoffman-La Roche Limited v. Delmar Chemicals Limited, that:
“… there is no statutory requirement that he prove that he is competent to produce the food or medicine or that he is possesses of the equipment, know-how and resources to do so, though the Commissioner may consider it of some importance, depending on the facts of the case to be informed of the applicant’s qualifications and if he thinks necessary to inquire into them.” ([1965] 1 Ex. C. R. 615, 43 C.P.R. 93, 46 D.L.R. (2d) 140).”[50] Canada subsequently introduced sections 55.2(1) and 55.2(2)[51] to incorporate the Canadian Supreme Court’s decision in the above case in the Canadian Patent Act which became a subject of dispute between Canada and the EC before the DSU and resulted in the WTO Panel decision in Canada-Patent Protection of Pharmaceutical Products which has been extensively discussed by Daya Shanker.[52]
Similar decisions were made in the USA. These decisions including those of Roche Products, Inc. v. Bolar Pharmaceuticals Co. (572 F. Supp. 255 (1983)) were again based on the concept of making and use in the patent acts of the USA.
The US Supreme Court in Brown v. Duchesne (60 U.S. 183) observed that
“But so far as the mere use is concerned, the vessel could hardly be said to use it while she was at anchor in the port, or lay at the wharf. It was certainly of no value to her while she was in the harbor; and the only use made of it, which can be supposed to interfere with the rights of the plaintiff, was in navigating the vessel into and out of the harbor, when she arrived or was about to depart, an while she was within the jurisdiction of the United States. Now it is obvious that the plaintiff sustained no damage, and defendant derived no material advantage, from the use of an improvement of this kind by a foreign vessel in a single voyage to the United States, or from occasional voyages in the ordinarily pursuit of commerce; or if any damage is sustained on the one side, or any profit or advantage gained on the other, it is so minute that it is incapable of any appreciable value.[53]”
The US Supreme Court while trying to work out the damage to the plaintiff, was only concerned with the use of the patent only in US water and concluded that during such voyage the damage sustained by the patent holder was “incapable of any appreciable value.” i.e. if the use made of such a patent was not affecting the profit of the patent holder in the USA. This interpretation, the US Supreme Court reached on the basis of its observation not to read the words "use" in the clause literally. The US Supreme Court in Brown v. Duchesne, the US Supreme Court further observed
“The general words used in the clause of the patent laws granting the exclusive right to the patentee to use the improvement, taken by themselves, and literally construed, without regard to the object in view, would seem to sanction the claim of the plaintiff. But this mode of expounding a statute has never been adopted by any enlightened tribunal – because it is evident that in many cases it would defeat the object which legislature intended to accomplish. And it is well settled that, in interpreting a statute, the court will look merely to a particular clause in which general words may be used, but will take in connection with it the whole statute (or statutes on the same subject) and the objects and policy of the law, as indicated by its various provisions, and give to it such a construction as will carry into execution the will of the Legislature, as thus ascertained, according to its true intent and meaning.[54]”
A very pertinent observation the US Supreme Court made was that
“Neither will the court, in expounding a statute, give to it a construction which would in any degree disarm the Government of a power which has been confided to it to be used of the general good – to the community – unless plain and express words indicated that such was the intervention of the Legislature.”[55]
The term “make” was also discussed in Deepsouth v. Laitram (406 U.S. 518) by the US Supreme Court, which observed
“The Court of Appeals, believing that the word “makes” should be accorded “a construction in keeping with the ordinary meaning of that term, “443 F.2d, at 938, held against Deepsouth on the theory that “makes” means what it ordinarily connotes – the substantial manufacture of the constituent parts of the machine.” Id., at 939. Passing the question of whether this definition more closely correspond to the ordinary meaning of the term than that offered by Judge Swain in Andrea 35 years earlier (something is made when it reaches the state of final “operable” assembly), we find the Fifth Circuit’s definition unacceptable because it collides head on with a line of decisions so firmly embedded in our patent law as to unassailable absent a congressional recasting of the statute.”[56]
In its own inimitable and in violation of the US Constitution, US Court of Appeals For Federal Circuits tried to overrule this definition of “make” in Paper Converting Machines Co. v. Magna Graphics Corp. 745 F.2d 11, 19-20 in a vicious mocking of its Supreme Court but since as per the US Constitution, the Supreme Court is final arbiter of the law, the opinion of the Court of Appeals would be per incuriam.
Other judgments dealing with non-infringement forming a patented product for experimental purpose are Dugan v. Lear Avia, Inc. 55 F. Supp. 223, p. 229 affirmed 156 F.2d 29 (2d Cir. 1946); Roche Products, Inc. v. Bolar Pharmaceutical s Co. 572. F. Supp. 255, p. 258, subsequently reversed by Court of Appeals in Roche Products, Inc. v. Bolar Pharmaceuticals Co. 733 F. 2d 858 which in turn was overruled by Bolar Exemption by introduction of Section 271(e) in the US Patent act; Aakro Agate v. Master Marble Co., 18 F. Supp. 305 (N.D.W. Va. 1937) where experimentation with a marble manufacturing device covered by plaintiff’s patent prior to going into production was held not an infringing use.
In Chesterfield v. United States, 141 Ct. Cl. 838, 159 F. Supp. 371 (Ct. Cl. 1958), the Claims Court observed “Moreover, if these two claims are construed to be valid over the prior art and to be definite, the claims are not infringed by the accused S-816 alloy; the claims are not infringed by the use of the accused 422-19 alloy, and the claims are not infringed by the use, if any, of all 6059 alloys.[57]”
This observation, the Court of Claims made after its observation in para 44 made it clear that the decision of the Court of claims was not an obiter dictum but a well thought out proper decision. The Court of Claims in para 44 said
“The defendant has admitted that it procured, within the accounting periods set forth in finding, a total of 3,679 pounds of an alloy designated as 422-19. The defendant has admitted that some of the foregoing 422-19 alloy was formed into 101 turbo-supercharger buckets delivered to an agency of the defendant for experimental use and testing. There is no evidence that defendant’s use, if any, of the remainder of said 422-19 alloy was other than experimental.[58]”
The Court of Claims’ observation in Pitcairn[59] and its subsequent reproduction by the Federal Circuit in Roche Products[60], by trying to overrule a well thought out judgement as ‘obiter dicta’ is more of an attempt to arrive at a preconceived decision rather than result of a disciplined judicial mind.
In Pitcairn the Court while trying to overrule Chesterfield and others observed
“Defendant’s reliance on the Court’s opinion in Chesterfield, supra, is likewise without merit. The Court’s statement in its opinion there that experimental use does not infringe constituted pure obiter dictum. The Court’s opinion specifically stated:
“Where the court finds as a fact that the patent claims in suit are clearly invalid *** it may not be necessary to consider the issue of infringement. 141 Ct. Cl. At 840.”[61]
The Court of Claims in Pitcairn further observed
“The court’s reference to experimental use was clearly unnecessary to the disposition reached in Chesterfield. It is also noted that in Chesterfiled the defendant procured by purchase, not by manufacture by or for the Government, certain alloys, which had been developed and used for supercharger buckets, and blades. In Chesterfield, the claim arose from defendant’s use of purchased alloys. In the present case, the infringing aircraft’s were clearly manufactured for the defendant.
Plaintiff has excluded from its present claim static test mechanisms manufactured for defendant. Numerous research and development contracts were entered into by the defendant and various manufacturers for the design, development and manufacture of experimental helicopters and none of those specific helicopters are the subject of this litigation. Defendant urges the court to exclude from compensation any aircraft used by the defendant for testing, evaluational, demonstrational or experimental purposes. Use for such purposes is use by or for the Government and is compensable. Obviously every new helicopter must be tested for lifting ability, for the effect of vibration on installed equipment, flight speed and range, engine efficiency, and numerous other factors. Tests, demonstrations, and experiments of such nature are intended uses of the infringing aircraft manufactured for the defendant and are keeping with the legitimate business of the using agency. Experimental use is not a defense in the present litigation.”[62]
The court’s opinion quoted by in Pitcairn is amusing as the concerned sentence did not deal with the opinion at all in Chesterfield. The sentence has been picked up from the paragraph of the Commissioner’s opinion, which reads as
“Two issues are before the court, first, the validity of the two claims in suit, and, second, whether the defendant has infringed said patent claims. It is recognized that, of those two issues, validity has the greater public importance. Sinclair & Carroll Co. Inc. v. Interchemcial Corp. 325 U.S. 327, 65 USPQ 297. Where the court finds that the patent claims in suit are clearly invalid for want of invention, it may not be necessary to consider the issue of infringement. The Dow Chemical Company v. Halliburton Oil Well Cementing Company, 324 U.S. 320, 64 USPQ 412” [63]
What has been quoted by the Pitcairn court was not the opinion at all but just a principle of interpretation in terms of Supreme Court judgments. The opinion is in paragraph 52, which says
“Summarizing, claims 5 of the ‘934 patent and claim 4 of the ‘935 patent are found to be invalid over the prior art and to be invalid for indefiniteness. Moreover, if these two claims are construed to be valid over the prior art and to be definite, the claims are not infringed by the accused S-816 alloy; the claims are not infringed by the use of the accused 422-19 alloy, and the claims are not infringed by the use, if any, of all 6059 alloys.”
Conclusion of Law
Upon the foregoing findings of fact, which are made a part of the judgement herein, the court concludes as a matter of law that claim 5 of plaintiff’s patent 1,698, 934 and claim 4 of plaintiff’s patent 1,698,935 are both invalid. It is also found that the claims are not infringed by the defendant. Plaintiff is not entitled to recover and his petition is dismissed.”[64]
The decision in Chesterfiled does not leave it in doubt that the experimental use of the patented product does not amount to infringement. This discussion becomes quite a curious one when it is discussed in Roche products where the Federal Circuit observed
“Pitcairn, the most persuasive of the Court of Claims cases concerning the experimental use defense, sets forth the law which must control the disposition of this case: “tests, demonstrations, and experiments *** which are in keeping with the legitimate business of the *** alleged infringer” are infringements for which “experimental use is not a defense.”[65] This essentially amounts to taking words out of a paragraph to construct an entirely new sentence. What Pitcairn had observed that these test meant for testing of helicopters for stability and vibrations etc would not qualify as experimental use. The word used was “such nature” which was removed by the Federal Circuit from its quote to suggest that any test, demonstration and experiments would not qualify for experimental exemption. The judgement in Roche Products was one of the classical examples of judicial lawlessness as described by Farnsworth[66] where not only relevant judicial pronouncements were ignored although they were present before the judges the judicial pronouncements were reconstructed to come to a motivated conclusion.
Based on Sawin v. Guild, 1 Robb, Pat. Case. 47, Fed. Cas. No. 12,391, the Court in Bonsack Machine. Co. v. Underwood (73 F. 206) observed
“The defendant denies the plaintiff’s right to maintain this suit on the grounds of license and privilege. He says plaintiff permitted him to make the one machine that he made, and that he has never used that machine for commercial purposes. It is true that, if an infringing machine is made or used as an experiment merely, it does not infringe former patents. And it has been held that the making of a machine for an experiment, and its exhibition as simply a model or illustration, do not of themselves constitute an infringement. Machine Co. v. Teague, 15 Fed. 390. To constitute an infringement, the making must be with intent to use for profit, and not for the mere purpose of philosophical experiment.”[67]
In Kaz Manufacturing Co., Inc. v. Chesebrough-Pond’s Inc., 211 F. Supp. 815 (S.D.N.Y. 1962), affirmed 317 F.2d 679 (2d Circuit, 1963), the court was very emphatic that “The cases, however, do make clear that an unauthorized construction of a patented article is not infringement per se, but that it is necessary to look beyond the fact of construction to the use to which the constructed article is, or is intended to be put.[68]”
Based on Amdur’s Patent Law and Practice, 608-609, 795 (1935), the court observed “The question here, therefore, is whether the use made, or intended to be made, by defendant of the constructed vaporizer disturbs the ’possession use and enjoyment of the exclusive privileges secured by … Letters Patent’ to plaintiff.”[69]
The court in Kaz quoted from Ruth v. Stearms Roger Manufacturing Co., 13 F. Supp. 697, 713 (D.C. Colo. 1935) (reversed on other grounds 87 F.2d 35 (10th Circuit, 1936) ‘The use of the patented machine for experiments for the sole purpose of gratifying a philosophical taste or curiosity or for instruction and amusement does not constitute an infringing use.’ In Ruth, the interpretation was based on wrong reading of Sawin v. Guild[70] where Justice Story observed
“… the making of patented machine to be an offence within the purview of it, must be the making with intent to use for profit, and not for the mere purpose of philosophical experiment, or to ascertain the verity and exactness of the specification. Whittemore v. Cuttter [Case No. 17,600]. In other words, that the making must be with an intent to infringe the patent right, and deprive the owner of the lawful rewards of his discovery.”[71] The intention of the maker is to make profit in the territory of the patent and not to “deprive the owner of the lawful rewards of his discovery.” In fact, in Ruth, the Court further stated “”See Popenhusen v. Falke, 4 Blatchf. 493, Fed. Cas. No. 11, 279; Robinson on Patents, vol. 3, page 61. The making or using of a patented invention merely for experimental purpose, without any intent to derive profits or practical advantage therefore, is not infringement. 48 C.J. 294”[72].
In Kaz, the court further elaborated the concept of making and use in the US patent act by observing
“In general terms, (a) patentee should be able to reserve and preserve his monopoly over the commercial use of his patented invention; in other words, he may altogether exclude others from the commercial field.’ Western Electric v. General Talking Pictures Corp., 91 F.2d 922, 928 (2d Cir., 1937), aff’d. 304 U.S. 175, 58 S. Ct. 89, 82 L.Ed. 1273 (1938), aff’d. 305 U.S. 124, 59 Ss. CT. 116, 83 L. Ed. 81 (1938), reh. Den, 305 U.S. 675, 59 S. Ct. 355, 83 L. Ed. 437 (1939). The right protected is the ‘right to be free from competition in the practice of the invention’. Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661, 665, 64 S. Ct. 268, 271, 88 L.Ed. 376 (1944).” [73]
In Kaz, the court further observed that “The concept of use extends beyond the physical acts performed and includes as well the purpose for which the acts are performed. It should be noted, again, that the cases cited above, stating that the various acts described do not constitute an infringement turn on the purpose to which the construction is directed.”[74]
The significance of the purpose for which the constructed article is intended to be used is reflected in the principle that ‘to constitute an infringement there must be substantial identity in result, means and mode (Life Manufacturing Co. v. Stanford Engineering Co., 299 F. 2d 223, 226 (7th Cir., 1962).
Based on the judgments as discussed above, the court in Beidler v. Photostat Corporation (10 F. Supp. 628) observed that mere “possession as a model does not constitute actual or threatened infringement in the absence of proof that the machine is held for the purposes of profit in violation of the exclusive right to the patentee to make, use and sell the patented invention, where there has been no invasion or threatened invasion of the patentee's monopoly after the grant."[75]
In Maxono Premix Burner Co. v. Eclipse Fuel Engineering Co., 471 F.2d 308 (7th Cir. 1972), the experimental construction of a prototype even paired with a sale was considered de minimis and insufficient to support an action for threatened infringement.
The commercial implications of the patented provision in the patent act are also evident by the discussion of the Panel in Canada-Patent Protection. Canada in its argument while dealing with legitimate interests of third parties argued that “… if the interests of third parties in other countries were not to be taken into account, the interests of the patent owner in those countries also should be taken into account. If the country in question was a Member, the interests of the patent owner in that country would be protected in accordance with that country’s intellectual property laws, which had to conform to the TRIPS Agreement as it applied to that country. If the country in question was not a Member and did not protect intellectual property rights, the patent owner had no interests in that country to protect.”[76]
There have been decisions to say that making for export would constitute an infringement of the patent act[77] but all of them have ignored decisions in Sawin v. Guild and other decisions discussed above and have tried to follow ordinary meaning of the term which the US Supreme Court in Deepsouth specifically overruled. In Bullock Electric v. Westinghouse, 129 F. 105 (1904), the Court of Appeal observed
“While it is true that the monopoly of the plaintiff’s patent did not extend beyond the limits of the United States, yet it would be no defense to say that the patented article had been made in the united States only for the purpose of being sold and used in a country to which the protection of the laws of the united States did not extend.”[78] Similar observation s have been made in Adriance, Platt v. McCormick Harvesting Mach. 55 F. 288[79] (1893) and Ketchum Harvester v. Johnson Harvester, 8 F. 586 (1881). Another judgement is in Packard Instrument v. Beckman Instrument, 346 F. Supp. 408, which tried to distinguish Deepsouth by saying that
“Defendant manufactures the accused device only in its plant in the United States, and that plant is the sole source of all the accused devices, it is infringed whenever defendant makes a device and ships it to a foreign country for sale and use there.”[80]
But all of them are based on the ordinary meaning of making and concept of making as absolute which these courts have been enjoined not to make and in case they have done, it has been overruled since then.
The relationship of export and manufacturing was mentioned in note 404 of the Canada-Patent Protection where Canada gave an assurance that it would “not permit commercial disposition of such products, even after the patent terms had expired, whether for export or for domestic sales.”[81] The basis for Canadian assurance regarding either export or domestic sale after the expiry of the patent had not been mentioned anywhere either in the parties argument or in the Panel Report but Article 3.2 and Article 19.2 of the DSU prohibits any addition or subtraction of the rights and obligations provided for in the covered agreement and since the covered agreement does not cover export, the Panel Report would not be applicable in the interpretation of the TRIPS Agreement. Even otherwise, Canada-Patent Protection Panel report has become per incuriam because of the reaffirmation in the Doha Declaration to interpret provisions of the TRIPS Agreement in terms of its object and purpose, which the Panel in Canada-Patent Protection specifically disregarded while interpreting international treaty provisions.
Although, the Panel tried to follow a constructionist approach in Patent Protection by insisting that both theoretically and legally additional market benefits for extended monopoly of the patent were a mater of right for the patent holder it did not give any justification for its argument and tried to support its assertion theoretically by observing “In theory, the rights of the patent owner are generally viewed as right to prevent competitive commercial activity by others, and manufacturing for commercial sale is a quintessential competitive commercial activity, whose character is not altered by a mere delay in the commercial rewards,”[82] the emphasis always stayed with commercial nature of the rights and that commercial nature of the rights pertains only to the territory of the patent.
Roche Products Judgement and Bolar Exemption
Exception to the right of ‘making’ or ‘use’ of patented product as a totality was arrived at by the US Court of Appeals for the Federal Circuit which many consider was specifically established to extend the monopoly in the name of bringing uniformity and harmonization in the interpretation of patent act interpretation, in Roche Products, Inc. v. Bolar Pharmaceutical Co. 733 F.2d 858 where the Federal Circuit reconstituted observation in Pitcairn and ignored judgements of superior courts to arrive at a very narrow interpretation of experimental use by eliminating any experimental use which had commercial application. Whether, such allegations are true or not but the record of judicial lawlessness (misinterpreting the Supreme Court’s judgment) and judicial dishonesty (by ignoring the Supreme Court’s judgments) shown by the Court of Appeals support the contention that judicial and fair decisions were possibly not the purpose behind its establishment. In Bolar, while reversing the judgment of District Court, The Court of Appeals after quoting Cabell v. Markham, affirmed, 326 U.S. 404, 66 S. Ct. 193, 90 L. Ed. 165 (1945) that “it is one of he surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning”, went on to read Section 271 as not permitting the experimental use of a patent invention if it has commercial implications. Subsequently it conceded that in view of a number of judgments, the word “use” cannot be taken to its utmost possible scope (Pittcairn v. United States, 212 Ct. Cl. 168, 547 F.2d 1106, 192 U.S.P.Q. (BNA) 612 (1976), cert. Denied, 434 U.S. 1051, 54 L. Ed. 2d 804, 98 S. Ct. 903 (1978) (experimental use may be a defense to infringement); United States v. Univis Lens Co., 316 U.S. 241, 86 L. Ed. 1408, 62 S. Ct. 1088 (1942) (“An incident to the purchase of any article, whether patented or unpatented, is the right to use and sell it, .. “Id. At 249); General Electric Co., 316 United States, 215 Ct. Cl. 636, 572 F.2D 745, 198 U.S.P.Q. (BNA) 65 (1978) (“It can be properly assumed that as part of the bargain the seller of a device incorporating a patented combination properly assumed that as part of the bargain the seller of a device incorporating a patented combination authorizes the buyer to continue to use the device so long as the latter can and does use the elements he purchased from the patentee or licensor.” Id. At 784-85, 198 U.S.P.Q. (BNA) at 98).”[83]
However, the construction of experimental use as confining to “philosophical experiments, or for the purpose of ascertaining the sufficiency of the machine to produce the described effects” was against the decisions of Supreme Court Justice Story by mocking at the said judgment by saying
“The so called experimental use defense to liability for infringement generally is recognized as originating in an opinion written by Supreme Court Justice Story while on circuit in Massachusetts. In Whittmore v. Cutter, 1 Gall. 429, 29 F. Cas. 1120, 1121 (C.C.D. Massachusetts. 1813) (No. 17,600), Justice Story sought to justify a trial judge’s instruction to a jury that an infringer must have an intent to use a patented invention for profit, stating:
‘It could never have been the intention of the legislature to punish a man who constructed such a machine merely for philosophical experiments, or for purpose of ascertaining the sufficiency of the machine to produce its described effects.’
Despite skepticism, see e.g. Byam v. Bullard, 1 Curt. 100, 4 F. Cas. 934 (C.C.D. Mass. 1852) (No. 2,262) (opinion by Justice Curtis), Justice Story’s seminal statement evolved until, by 1861, the law was “well-settled that an experiment with a patented article for the sole purpose of gratifying a philosophical taste, or curiosity, or for amusement is not an infringement of the rights of the patentee.” Poppenhausen v. Falke, 19 F. Cas. 1048, 1049 (C.C.S.D.N.Y. 1861) (No. 11,279).”[84]
While discussing the above cases, as has become the practice with CAFC, it did not mention the interpretation of Whittemore v. Cutter, in Sawin v. Guild (21 F. Cas. 5541813 (Case NO. 12,391) where Justice Story of the US Supreme Court observed
“This court has already had occasion to consider the clause in question, and upon mature consideration, it has held that the making of a patented machine to be an offence within the purview of it, must be the making with an intent to use for profit, and not for the mere purpose of philosophical experiment, or to ascertain the verity and exactness of the specification. Whittmore v. Cutter [Case No. 17, 6001]. In other words, that the making must be with an intent to infringe the patent-right, and deprive the owner of the lawful rewards of his discovery.”
This is a very common theme with the CAFC where it picks up judgments with particular tendency and then uses it to construct interpretation with apparent monopolistic enhancement. The skepticism of Justice Curtis in Byam v. Bullard is
“Nor can I find any solid foundation on which to rest the right of a patentee to support an action on the case for the violation of his exclusive right, except that settled and reasonable common-law basis of all such actions, injury and damage; injury by a violation of the incorporeal right, and damage, at least nominal, presumed by the law to arise from such violation. Such I understand to have been the principle proceeded upon by Mr. Justice Story, Whittemore v. Cutter [Case No. 17,600], where he held that making a machine for a philosophical experiment, or to test the sufficiency of the specification, would not be an infringement; and in Sawin v. Guild [Id. 12, 391], where he says the act must be with intent to deprive the patentees of some lawful profit; and also by Mr. Justice Patteson, in Jones v. Pearce, Webst. Pat. Cas. 125, where he excepts the making of a patented article for mere amusement, and not for profit. In these cases inasmuch as there was supposed to be no damage, there was thought to be no action. And though I am rather disposed , with Mr. Justice Washington, in Watson v. Bladen [Case No. 17, 277], to doubt whether the assumption is correct, that in such cases there is no damage; yet if the assumption be correct, I think the inference is sound that no action lies.”[85] If there was any skepticism on the part of Justice, Curtis, he did not let that stop him from confirming Sawin v. Guild.
The interpretation of experimental use exception of Whittemore v. Cutter by Justice Story himself in Sawin v. Guild, 1 Gall. 485 was ignored by the CAFC in Roche Products although it is referred to in Byam v. Bullard. The exception to absolute or nearly absolute monopoly on making goes much more than Justice Story’s observation in Whittemore. In Steam Stone Cutter co. v. Sheldons, (21 F. 875, 1884) Justice Wheeler confirmed Sawin v. Guild by observing
“The mere sale of materials of a machine, complete and fit for operation, would not be an infringement of the patent on the machine, unless the sale was for use. Sawin v. Guild, 1 Gall. 485; Whittimore v. Cutter, Id. 480. When the orator recovered the profits of an infringement by the making and selling of these machines, it must have been a recovery for a sale for use, for such a sale only could be recovered for. The sale, apart from the use, would not be distinguishable as an infringement.”[86]
In Bonsack Mach. v. Underwood (73 F. 206, 1896), Justice Seymour observed
“And it has been held that the making of a machine as an experiment, and its exhibition as simply a model or illustration, do not of themselves constitute an infringement. Machine Co. v. Teague, 15 Fed. 390. To constitute an infringement, the making must be with an intent to use for profit, and not for the mere purpose of a philosophical experiment. Sawin v. Guild, 1 Robb, Pat. Cas. 47 Fed. Cas. No. 12,391.”[87]
A series of decisions laying down the law in the USA makes it apparent that simple making does not constitute an infringement unless it means making for profit at the expense of the patent holder in the territory of the patent.
The reliance by the Court of Appeals in Poppenhusen v. Falke as the laying down the law on experiment was totally incorrect as it (observation in Poppenhusen limiting experiment to “… an experiment with a patented article for the sole purpose of gratifying a philosophical taste, or curiosity, or for mere amusement is not an infringement of the rights of the patentee) was based on misrepresentation of observation of Justice Story in Sawin v. Guild which held that “making of a patented machine to be an offence within the purview of it must be the making with an intent to use for profit, and not for mere purpose of philosophical experiment or to ascertain the verity and exactness of the specification.[88]”
The experimental use was also discussed in a number of Court of Claims decisions. There was a consistent approach till Pitcairn (Pitcairn v. United States, 212 Ct. Cl. 168) where Claim Court in Pitcairn did not overrule the previous decisions of the Court of Claims but tried to distinguish them to suggest that “In present case there is no evidence in defendant’s offer of proof that any of the helicopters to which defendant’s “experimental use” contentions pertain were build solely for experimental purposes.” Similarly, the waiver of remuneration for using alloys for experimental use for supercharger buckets and blades, was attempted to be distinguished by Court of Claims in Pitcairn by distinguishing procurement by purchase, not by manufacture by or for the Government, and used. In Bolar, CAFC virtually copied the observation of Court of Claims in Pitcairn without having a look at the judgment itself. Pitcairn at worse does not remotely suggest that experimental use exceptions are not permitted.
What it said was “Defendants urges the court to exclude from compensation any aircraft used by the defendant for testing, evaluational, demonstrational or experimental purposes. Use for such purposes is use by or for the Government and is compensable. Obviously every new helicopter must be tested for lifting ability, for the effect of vibration on installed equipment, flight speed and range, engine efficiency, and numerous other factors. Tests, demonstrations, and experiment of such nature are intended uses of the infringing aircraft manufactured for the defendant and are in keeping with the legitimate business of the using agency. Experimental use is not a defense in the present litigation.”[89]
It did not make it a rule or tried to overrule previous judgments of the higher courts as argued by the CAFC in its assertion by selectively quoting the above paragraph “tests, demonstrations, and experiments [which] are in keeping with the legitimate business of the [alleged infringer]” are infringement for which “experimental use is not a defense.”
However, in spite of its tendentious use and non-use of judgments, the Court of Appeals in Roche Products observed
“We cannot construe the experimental use rule so broadly as to allow a violation of the patent laws in the guise of “scientific inquiry”, when that inquiry has definite, cognizable, and not insubstantial commercial purpose.”[90] The ultimate observation of the CAFC is based on the substantial “commercial” purpose behind the use of a patented product.
The interpretation of Section 102(b) of the US Patent Act dealing with invalidation by sale of a product a year prior to the application date has been interpreted by the US Supreme Court in Pfaff v. Wells Electronics, Inc. where in a reverse situation than what has been discussed here, the court observed, “for a patent to be invalid due to the on-sale bar, “first, the product must be the subject of a commercial offer for sale” 525 U.S. 55, 67, 142 L. Ed. 2d 261, 119, S. Ct. 304 (1998). In Group One, Ltd. v. Hallmark Cards Inc. 254 F. 3d 1041, 1047, 59 U.S.P. 2d 1121 (Fed. Cir. 2001), the CAFC held that
“As a general proposition, we will look to the Uniform Commercial Code (“UCC”) to define whether, as in this case, a communication or series of communications rise to the level of a commercial offer for sale. As this court has previously pointed out, “the UCC has been recognized as the general law governing the sale of goods and is another useful, though not authoritative, source in determining the ordinary commercial meaning of “terms used by the parties …The Supreme Court’s formulation of a “commercial offer for sale” in Pfaff also supports consulting the UCC. The Supreme Court also cited the Restatement of Contracts with approval in the commercial contract law context.”[91] In Minnesota Mining and Manufacturing Company v. Chemque, Inc. 303 F. 3d 1294, 64 U.S.P.Q.2d (BNA) 1270, CAFC observed “The evidence in the record, however, only indicates that Ricon has sent samples of Ricoseal to various companies. Providing potential customers with samples of a product, without providing any other terms, is not a commercial offer for sale, because the recipient could not act in such a way that would create a contract.”[92] The provisions of the patent act were interpreted as only those which have sound commercial implications although the purpose was to validate a patent which was already in the market but the CAFC decided that unless such offer for sale crosses the threshold of “commercial offer” it would not invalidate the patent.
The discussion above points out that even including judgment of the CAFC in Bolar, the making and use does not infringe the patent if the making is not for commercial purpose to harm or damage the interests of the patent holder in the territorial limits of the patent.
Section 271(e) (1) of the US Patent Act and Commercial Exceptions
The Bolar judgment led to amendment of the US Patent Act when the US Congress
added Section 271(e)(1) to the US Patent Act explicitly to reverse the Federal
Circuit’s decision in Roche Products, Inc. v. Bolar Pharmaceuticals Co. 733
F.2d 858, cet. denied, 469 U.S. 856, 83 L.Ed. 2d 117, 105 S.Ct. 183 (1984). In
1984, US Congress enacted the Drug Price Competition and Patent Term Restoration
Act of 1984, 98 Stat. 1585 (1984) Act), which amended the patent laws in several
important respects along with certain amendments of the FDCA. Section 271(e)(1)
of the US Patent Act as originally enacted, provided
“It shall not be an act of infringement to make, use, or sell a patented
invention (other than a new animal drug or veterinary biological product (as
those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of
March, 1913) solely for uses reasonably related to the development and
submission of information under a Federal law which regulates the manufacture,
use, or sale of drugs.” 35 U.S.C. s. 271(e)(1) (1982 ed., Supp. II).
This section popularly known as the Bolar Exemption was a matter of discussion
in Canada-Patent Protection dispute as the EC did not question Bolar exemption
present in the US patent acts on the ground that the US patentee acts provides
for extension of patent in case of delay in regulatory approval. The panel
however, did not agree with the EC’s contention.
The term “patented invention” in section 271(e)(1) became a controversial
issue when Elli Lilly interpreted the statutory phrase, “a Federal law which
regulates the manufacture, use , or sale of drugs” to refer only to those
individual provisions of federal law that regulates drugs, whereas Medtronic
interpreted it as referring to entirety of any Act (including FDCA)) where some
of the provisions regulate drugs.
Based on CAFC’s observation that the manufacture, use, or sale of a patented
invention during the term of the patent constituted an act of infringement of s.
271(a), even if the sole purpose of conducting the tests and developing
information necessary to apply regulatory approval led to the extension of de
facto monopoly for a substantial long period. The 1984 Act also included
enactment of Section 201 of the US Patent Act which established extension for
patents relating to certain products that were subject to lengthy delays and
could not be marketed prior to regulatory approval. The product was defined as
“(1) The term ‘Product’ means;
(A) A human drug product
(B) Any medical device, food additive, or color additives subject to regulation
under the Federal Food, Drug, and cosmetic Act.”
Bolar Pharmaceuticals had obtained from a foreign manufacturer a generic drug
covered by a domestic patent in order to test bioequivalency tests necessary for
the FDA Approval. The 1984 Act, enacted after Roche decision, attempted to
establish a streamlined procedure for the FDA approval of generic drugs to
hasten their introduction in the market to apparently correct two distortions
that had crept in 17 year patent term because of the stipulation that certain
products receive pre-market regulatory approval. The US Court in Intermedics,
Inc. v. Ventritex (775 F. Supp. 1269) discussed these two reasons in terms of
the US Supreme Court decision in Eli Lilly v. Medtronic (110 S.Ct. 2683; 496
U.S. 661). It observed these two reasons as
“First, as a practical matter, the holder of a patent related to a device or
drug that is subject to regulatory approval could not reap financial rewards
during the term of a patent because the patented product was kept out of the
marketplace until substantial testing and regulatory approval was completed.
Section 201 of the 1984 Act sought to eliminate this distortion by establishing
patent term extension for patents related to certain products that were subject
to lengthy regulatory delays and that could not be marketed prior to regulatory
approval. Eli Lilly, 110, S. Ct. At 2688
The second distortion addressed by the 1984 Act occurred at the other end of the
patent term. Section 271(e)(1), enacted as section 202 of the 1984 Act,
responded to congressional concern that under Roche the arrival of generics on
the market place would be unduly delayed if the bioequivalency testing required
by the FDA could not begin until expiration of the patent. Since, under Roche,
testing which made use of a patented product couldn’t begin after expiration
of the competitor’s patent term, the patentee’s monopoly would continue,
often for a substantial period of time, until the competitor obtained regulatory
approval. In order to eliminate this distortion Congress passed s. 202
(271(e)(1) ) which allows competitors, prior to the expiration of a patent, to
engage in otherwise infringing activities related to obtaining regulatory
approval. Id. At 2689; See H.R. RTE p. No. 98-857, 98th Congress., 2d Sess.,
reprinted in 1984 Code Cong. & Ad. News (hereafter “legislative
history”) 2647, 2678-79, 2692-93).”[93]
Some of the developments leading to amendment of Section 271 and Section 156 of
the US Patent act was dealt with by the Federal Court of Appeals in Eli Lilly
& Co. v. Medtronic (872 F.2d 402, 405) which mentions that the additions
were made to pending legislation providing for abbreviated testing procedures
for generic drugs. H.R. 3605, 98th Cong., 1st Sess. (1983) (“Drug Price
Competition Act of 1983”). The Drug Price Competition and Patent Term
Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585, signed into law in
1984 took into consideration the attempt by the generic manufacturer to permit
testing for FDA approval and pending bill for extension of the patent for the
products requiring FDA approval.
The CAFC decided that the amendment was done solely to reverse its
interpretation of experimental use interpretation and since that interpretation
was meant for each and every patented invention and not for drugs alone, the
amendment leading to enactment of s. 271(e)(1) would overrule each and every
observation of the CAFC in Roche.[94] The CAFC agreed that Congress repealed the
Roche interpretation of the language of S. 271(a) and since Roche interpretation
covers other products apart from drugs, the repealation would remove
infringement from every other activity of product i.e. Congress set aside the
Roche interpretation in all its ramifications.
The court in Intermedics made certain very important observations regarding the
purpose behind introduction of s. 271(e)(1). It observed “In the legislative
battles that ensued, it was clear that a principal purpose of the generic drug
interests was to position themselves to be able to market their products on a
massive commercial scale just as soon as the patent rights expired on the drugs
which the generics incorporated.[95]” The Intermedics court strengthened its
argument subsequently by stating that
“We believe that in enacting this exemption Congress clearly decided that it
wanted potential competitors to be able to ready themselves, fully, during the
life of the patent, to enter the commercial marketplace in a large scale way as
soon as the relevant patents expired. Only by permitting this preparation to
enter the market meaningfully could Congress achieve its goal of assuring the
public prompt access to new medical products at the lowest commercially feasible
prices.”[96] In Intermedics, the court further extended this concept by
extending its discussion by observing
“..by enacting this exemption, congress has said to the public: “You may
commit acts of infringement only so long as those acts are solely for uses
reasonably related to gaining FDA approval to market your product. If you engage
in infringing activities for other uses, the exemption will not protect you. But
if you engage in non-infringing acts for other uses, your do not lose the
benefits of this statutory amendment… Thus the exemption Congress provided is
not lost simply as a result of a showing that the defendant has engaged in
non-infringing acts whose “uses” fall outside those permitted by the
statute.”[97] These uses constituted business activities like raising capital,
establishing distribution network which are required by the firms trying to
enter the commercial market in a significant way.
The CAFC in its last judgment pertaining to Eli Lilly v. Medtronic (915 F.2d
670) reiterated its observation in Lang v. Pacific Marine and Supply Co. (895
F.2d 761, 13 U.S.P.Q.2D (BNA) 1820 (Fed. Cir. 1990, ‘Section 271 does not
cover acts other than an actual making, using, or selling of the patented
invention’) that ‘A threat of sale does not constitute an act of
infringement’.[98]
The Intermedics court while discussing the purpose of non-infringing activity of
the party also said
“…Congress clearly intended, by enacting this exemption, to create a legal
environment in which potential competitors of patent holders would be free,
through non-infringing activities like raising capital, to position themselves
to enter the market in a commercially significant way just as soon as the
relevant patents expired. And at least with respect to products like those in
issue here, products that are extremely sophisticated, that will carry a large
price tag if they reach the retail stage, and that are very expensive to
develop, potential competitors must engage in considerable “business”
development and promotion activity just to meet the FDA’s requirements, let
alone to be in a position to market their products meaningfully when the various
legal barriers have been overcome.”[99] These observations of Intermedics
court was repeated in NeoRx Corp. v. Immunomedics (877 F. Supp. 202, 205) and in
Chartex International PLC v. M.D. Personal Products, NO. 92-1556, 1993 U.S. App.
LEXIS 20560, at 7, 9 (Fed. Cir. Aug. 12, 1993).
The Federal court in Chartex did not find that sections 155 and 156 as limiting
section 271(e)(1) of the US Patent Act.[100] In Chartex, the Federal Court of
Appeals also supported observation in Intermedics v. Ventritex, that MDPP could
use the data derived from those devices for more than FDA approval. This
observation in Chartex by Court of Appeals was based on its observation in
Telectronics Pacing Sys., Inc. v. Ventritex Inc., 982 F. 2d 1520, 1524, 25
USPQ2D 1196, 1199 (Fed. Cir. 1992) where CAFC reasoned
“If Congress intended to make [immediate competition at the end of the patent
term] more difficult, if not impossible, by preventing competitors from using,
in an admittedly non-infringing manner, the derived test data for fund raising
and other business purposes, it would have made that intent clear. The statute
contains no such provision.”[101]
It repeatedly affirmed the judgement in Intermedics v. Ventritex (775 F. Supp.
1269, 1278, 20 USPQ2D1422, 1428 (N.D. Cal. 1991), affirmed , 991 F.2d 808 (Fed.
Cir. 1993) (non-precedential decision) that “non-infringing activities, by
definition, do not constitute infringement.” [102] and “do not require the
shield of the FDA exemption.”[103]
(FDA has its own requirement that prohibit sponsors of medical devices from
promoting, test marketing or commercializing, investigational devices. 21 C.F.R.
s. 812.7(b) (1989). Commercializing a device means charging the subjects or
investigators more than the costs of manufacturing, researching, developing, and
handling the device. 21 C.F.R. s. 812.7(b) (1989))
A very relevant observation made by CAFC in Telectronics during the development
of section 271(e)(1) was that “As the House of Representative Committee on
Energy and Commerce stated, “the Constitution empowers Congress to grant
exclusive rights to an inventor for a limited time. That limited time should be
a definite time and, thereafter, immediate competition should be encouraged.”
H.R. Rep. No. 98-857 n(i), 98th Congress., 2d Sess. 46 (1984), reprinted in 1984
U.S.C.C.A.N. 2647, 2679. If Congress intended to make that more difficult, if
not impossible, by preventing competitors from using, in an admittedly
non-infringing manner, the derived test data for fund raising and other business
purposes, it would have made that intent clear. The statute contains no such
provisions.”[104]
Intermedics argued that infringing activities permitted under s. 271(e)(1) was
“solely for uses reasonably related to the development and submission of
information under a federal law, which regulates the manufacture, use, or sale
of drugs.”
The court in Intermedics observed that the primary concern of US Congress behind
enactment of s. 271(e)(1) “was to create legal environment that would enable
new, medically beneficial, cost-competitive products to reach the general
marketplace in meaningful volume just as soon as the undistorted operation of
the patent laws would permit (i.e., as soon as the 17-year life of relevant
patent expired).”[105] The court in Intermedics further observed that
“The emphasis in other words should be on the positive, not the negative. And
it would be inconsistent with the positive goal of maximizing post-patent
availability for lower priced new products to artificially limit the exemption
only to those parties who would (or could) not enter the market place until
after the patents expired.
There are additional, arguably more telling difficulties with plaintiff’s
position. We note first that Congress explicitly rejected an effort by
Representative Moorehead to limit the availability of the exemption to the last
year of the term of any relevant patent. (See Legislative History at 2692).
Thus, it is clear that the issue of limiting the availability of the exemption
was squarely considered by the legislative Branch. Yet that Branch did not even
remotely intimate in the statute that it enacted that it wanted any such
limitation imposed. This fact should make the judiciary extremely reluctant to
superimpose a substantial reduction in the scope of the statute that has no
basis in statutory language.”[106]
Based on the US Supreme Court’s observation in Eli Lilly, the US court
observed that medical devices do not have to be compared to its patented
prototype as is the case with bioequivalency testing of generic drugs. “Such a
manufacturer, though subject to FDA approval and theoretically engaged in
activities “solely for uses reasonably related” to such approval, may not
believe that it is infringing, and therefore may have no reason to wait until
the expiration of the allegedly infringed patent to begin commercial
marketing.[107]”
A very pertinent observation raised by Intermedics was regarding
constitutionality of s. 271(e)(1) as it would amount to “taking” without
compensation. The court in Intermedics observed “Congress extensively
considered whether the interference with a patent holder’s rights contemplated
by the statute would amount to an unconstitutional taking. (See Legislative
History at 2711-2714). Subsequently, the Supreme court considered whether the
inclusion of medical devices along with drugs within the scope of the statue
would create a taking. The Court concluded that it would not, noting along the
way that the competitive injury resulting from the exemption statue would be de
minimis in some cases although “surely it is substantial in others.” Eli
Lilly and Co. v., Medtronic, Inc., 110 S. Ct. 2683, 2692, n. 5, 2693, n. 7, 110
L.ED. 2d 605, 15 U.S.P.Q.2D (BNA) 1121.”[108]
However, in the follow up the Intermedics court made it clear that the court
would “maintain the patent holder’s rights to exclude others (including
defendants) from the general commercial marketplace, the harms that a patent
holder may suffer because of a competitor’s use of s. 271(e)(1) are
substantially the same regardless of when the defendant hopes to conclude
testing.” It is the protection of the patent holder from the “commercial
marketplace” and the harms that a patent holder may suffer in the territory of
the patent that is the substantial issue, not the general making of the patented
product.
In Amgen v. Hoechst Marion Roussel (3 F. Supp. 2d 104), the court discussed
export of a quantity from Batch 07 by Hoechst to its Japanese affiliate in early
part of 1997. The argument given by Hoechst was that this export was to be
“used as a standard reference in studies being conducted to evaluate an
alternative manufacturing process”.[109] Amgen objected to this export as the
shipment apparently bore no reasonable relationship to FDA approval because no
approval had been sought for the alternative process. The Amgen court observed
“There is no question but that an alternative manufacturing process would
require separate FDA approval. See 21 C.F.R. s. 601.12 (b) Moreover, the FDA
Guidelines contemplate the use of a reference standard sample from one
manufacturing process to evaluate the effects of alternation in that process.
See Center for Biological Evaluation and Research and Ctr. For Drug Evaluation
and Research, FDA Guidance Concerning Demonstration of Comparability of Human
Biological Products 3-6 (1996) at 3-6, App. Defs.’Mem. Supp. Mot. Summ. J.
(hereinafter “Def. App.” Tab 25. The defendant’s efforts to evaluate that
process were therefore within the class of activities protected by the statute,
regardless of whether they had sought FDA approval at the time. See Abtox, 122
F.3d at 1027, 1029-30. Amgen cannot defeat application of the statute merely by
questioning the Defendant’s sincerity, and thus has raised no genuine issue of
material fact.” [110]
In Amgen, the court also discussed the question of commercial production of
patented products by Generic manufacturer. The argument was based on Amgen’s
assertion that Hoechst had planned a total of five batches of commercial scale
production of GA-EPO as required by Japanese and European regulatory agencies
and had produced at least three commercial scale production apart from batch 07.
However, the court observed
“The FDA requires that a manufacturer demonstrate the consistency of its
manufacturing process by producing three consecutive batches within certain
tolerances of a standard reference. See, FDA, Guidance Concerning Demonstration
of Comparability at 19, Def. App. Tab. 25. The Defendants acknowledge that the
first two batches were consistent with one another, Unwin II Tr. At 12-14, but
that they were not satisfied with the potency of the batches, and do not plan to
submit them to the FDA in satisfaction of the consistency batch requirement.
Amgen asserts that the Defendants abandoned a successful effort to demonstrate
consistency because of their commercial disappointment in the product
quality.”[111]
The court in Amgen observed that Hoechst was protected by section 271(e)(1) if
the production of three batches of GA-EPO was objectively likely to generate
useful information, even if the results were discarded for reasons unrelated to
FDA approval. The court specifically observed that retention of the GA-EPO
manufactured is not an activity that could constitute infringement under section
271(a) as was observed in Telectronics at p. 1523-24.[112]
The CAFC in Abtox, Inc. v. Exitron Corporation 122 F.3d 1019; 43 U.S.P.Q.2D
(BNA) 1545) discussed the interpretation of US Supreme court in Eli Lilly v.
Medtronic regarding complementarity and trade off between section 271(e)(1) and
section 156 and observed that although the 1984 supplied tradeoff benefits to
competing segments of pharmaceutical industry, the US Supreme Court
“explicitly accepted a statutory interpretation “in which a patentee will
obtain the advantage of the [section 156] extension but not suffer the
disadvantage of the [section 271(e)(a)] non-infringement provision, and others
in which he will suffer the disadvantage without the benefit.”[113] 496 U.S.
at 671-72. In other words, the Supreme Court commands that statutory symmetry is
preferable but not required.”[114] Infigen (Infigen v. Advanced Cell
Technology, Inc. 65 F. Supp. 2d 967) and Scripps Clinic v. Genentech (666 F.
Supp. 1379) have given contradictory opinions but they appear to have ignored
practically all the decisions discussed above particularly judgements of Federal
Court of Appeals in Chartex and Apotex regarding the interpretation of the US
Supreme Court’s judgement in Eli Lilly v Medtronics. This has become a unique
feature of the US Commercial judiciary, which instead of following judicial
discipline as envisaged in the US Constitution consider themselves institutions
promoting the perceived national cause. In Scripps, the court tried to read the
House Report accompanying s. 271(e)(1)
“a generic drug manufacturer may obtain a supply of a patented drug product
during the life of the patent and conduct tests using that product if the
purpose of those tests is to submit an application to FDA for approval. … the
only activity which will be permitted by the bill is a limited amount of testing
so that generic manufacturers can establish the bioequivalency of a generic
substitute. The patent holder retains the right to exclude others from the major
commercial marketplace during the life of the patent. Thus, the nature of the
interference with the rights of the patent holder is not substantial.” (pp.
2689-2692).[115]
The only relevant phrase limiting the scope of section 271(e)(1) is “major
commercial marketplace during the life of the patent” which can be read as
permitting generic manufacturers to do everything except to disturb the major
marketplace during the term of the patent. Scripp has been overruled by the CAFC
in Telectronics, Chartex, Abtox and Intermedics and by the US Supreme Court in
Eli Lilly v. Medtronic.
In Infigen (Infigen v. Advanced Cell Technology, 65 F. Supp. 2d 967)), the
District Court for Western District of Wisconsin made tow curious observations
pertaining to relationship between products under section 156 and 271(e)(1) and
experimental use. Both of them it read incorrectly and against the series of
decisions of the superior courts. Regarding total symmetry between products in
sections 156 and 271(e)(1), it observed
“My own research shows no cases granting the s. 271(e)(1) exemption from the
otherwise infringing use of any product other than those drugs, medical devices,
food and color additives defined specified in section 156. See, e.g., Eli Lilly,
496 U.S. 661, 110 L.Ed. 2d 605, 110 S.Ct. 2683 (implanatable cardiac
defebrillator); Abtox, Inc. v. Exitron Corp., 122 F.3d 1019 (Fed. Cir. 1997)
(medical device for sterilizing plasma); Glaxo, Inc. v. Novopharm, Ltd., 110
F.3d 1562 (Fed. Cir. 1997) (active ingredient in anti-ulcer medication);
Telectronics Pacing Systems, 982 F.2d 1520 (implanatable defibrillator); Ortho
Pharmaceutical Corp. v. Smith, 959 F.2d 936 (Fed.Cir.)(oral contraceptive);
Amgen Inc. v. Hoechst Marion Roussel, Inc., 3 F. Suppp. 2d 104 (D. Mass . 1998)
(Hormone that stimulated growth of red blood cells); Key Pharmaceuticals, Inc.
v. Hercon Laboratories Corp., 981 F. Supp. 299 (D. Del. 1997) (transdermal
patch); Neo Rex Corp. v. Immunomedics, Inc., 877 F. Supp. 202 (D.N.J. 1994)
(product for labeling proteins to detect and treat cancer); Infinitech, Inc. v.
Vitrophage Inc. 842 F. Supp. 332 (N.D. Ill. 1994) (perflurocarbon used in
retinal surgery); Baxter Diagnostics Inc. v. ACL Scientific Corp., 798 F. Supp.
612 (C.D. Cal. 1992) (medical devices).”[116]
It is unfortunate that with so much of research, Judge Crabb did not take into
consideration Eli Lilly v. Medtronic properly nor its interpretation by the
Federal Circuit which specifically says that section 156 is not to be read as
limiting the exemption under Section 271(e)(1). Another pronouncement by Infigen
court is regarding experimental use where based on limited research, the court
did not appreciate the fact that Whittemore v. Cutter, 1 Gall. 429 F. Cas, 1120,
1121 (C.C.D. Mass. 1813) was interpreted by Justice Story himself in Sawin v.
Guild which said that
“This court has already had occasion to consider the clause in question, and
upon mature deliberation, it has held that the making of a patented machine to
be an offence within the purview of it, must be the making with an intent to use
for profit, and not for the mere purpose of philosophical experiment, or to
ascertain the verity and exactness of the specification. Whittmore v. Cutter
[Case No. 17, 600]. In other words, that the making must be with an intent to
infringe the patent-right, and deprive the owner of the lawful rewards of his
discovery.”[117]
The relationship between Section 271(e)(1) and Section 156 has been discussed by
the US district Court in Bristol-Myers Squibb v. Rhone-Poulenc Rorer (2001 U.S.
Dist. EEXIS 19361) on the basis of US Supreme Court observation in Eli Lilly v.
Medtronic, 496 U.S. 661, 665 to hold that “nothing in text of Section
271(e)(1) indicates that Congress intended to restrict the scope of term
“patented invention” to those products covered by Section 156”[118]. The
court in Bristol discussed the narrow interpretation of s. 271(e)(1) in Scripps
and pointed out the misplaced observation by the Scripps court. It said
“ … the statement cited by RPR (Rhone Poulenc Rorer) was made by the
Committee of the judiciary in response to a failed amendment, offered by one of
its members, Mr. Moorhead. Mr. Moorhead recognized that the language of Section
271(e)(1) was so broad that it would apply to all drug patents, not merely those
that are covered under Section 156, and only disallow commercial use of a
patent. (1984 U.S. C.C.A.N. at 2719-20). Despite the broad scope of the language
used in Section 271(e)(1) having been expressly brought to the attention of
members of Congress, no attempt was made to refine or narrow the language used
in the text of Section 271(e)(1).”[119] The court in Bristol also quoted from
the House Committee on Energy and Commerce to discuss the balance of bringing
new generic drugs to the market with the need to uphold the rights of patent
owners.[120]
Experimental Use in Germany
Two cases having direct relevance to the concept of total ban on the
“making” as narrated in Article 28 of the TRIPS Agreement in Germany are
“Klinische Versuche” (Federal Supreme Court (BGH), 11th July, 1995, GRUR
1996, 109 – “Klinische Versuche”) and “Zwangslizenz” (Federal Supreme
Court (BGH), 5 December, 1995, GRUR 1996, 190 – “Zwangslizenz”). In
Klinische, the defendant had developed a drug called Polyferon for treating
classic rheumatoid arthritis by experimenting with human interferon resulting in
an approval by the German Federal Department of Health. They had also been
granted compulsory licenses ( see 24 IIC 397 (1993)) after the plaintiffs had
rejected their request for a license. In Germany experimental use exceptions
normally cover use of patented product to perform experiments without commercial
or profit interests however, what constituted a non-commercial use is regarded
as little controversial. Some support the notion that the defense of
experimental use only extends to testing the functioning of the patented
invention while others argue that experiments do not extend to experimental
activities that go beyond the actual research i.e. for “obtaining approval by
a regulatory body and thereby preparing for commercial exploitation.”[121]
Section 11(2) of the German Patent Act introduced in 1981, permits acts done for
experimental purposes relating to the subject matter of the patented invention
which was essentially based on Community Patent Convention (CPC 1975; now
Article 27(b) CPC 1989). The Dusseldorf Court of Appeals held that experiments,
which fall outside the testing to establish the characteristics of the patented
product or the feasibility of its production, would be an act of infringement.
The argument by Dusseldorf was that such use would prevent original patentee
from exploiting his product of that specific use and thus would diminish the
economic value of the patent. The German Supreme Court reversed this decision of
Dusseldorf Court of Appeal by pointing out that focus of section 11(2) is the
purpose and not the activity or uses itself. The German Supreme Court defined
“experiments” as any systematic action for obtaining knowledge, independent
of the purpose for which the new knowledge will ultimately be used otherwise the
experimental use introduces an element of finality in the experimental acts and
the patented product. The experimental use thus would cover all the scientific
research without any quantitative or qualitative restriction on uncovering
further research results and further commercial results. The German Supreme
court’s opinion was based on negotiating history of Art. 31(b) CPC which
stated that a patented invention could be used to test the possibilities of new
application and further development. The German Supreme Court also took into
account that German Constitution Art 5(3) provides for total freedom to research
and limitations on property in the interest of public welfare (Art 14 , German
Constitution) which does not make the patented invention as one of absolute
protection if it restricts the development of technology. Kern (1996) summarized
the German court argument by stating that “…the public interest in
furthering technology demands that a clinical tests and experiments remain
“privileged” pursuant to Section 11(2) , even if an accumulation of
applications discovered by third parties whilst using the patented substance may
severely encumber the patent’s exclusive exploitation.”[122] The German
Supreme Court observed that Section 11(2) exempts all acts from the effects of a
patent that are done for experimental purposes relating to the subject matter of
the patented invention, “the permissibility of such experiments cannot be
contingent on what the purposes they are to achieve, be they pure scientific or
regulatory in nature.” The German Supreme Court rejected the argument of
diminishing the economic value of the patent because of such experimental use by
observing that the patent protection for further uses “does not flow from the
experimental use exemption but is inherent in the patent system.”[123] While
for the new use of the patented product there is no ban but the dependent patent
can be exploited only by the consent of the patent holder.
Experimental use in Japan
In Ono Pharmaceuticals Co., Ltd. v. Kyoto Pharmaceutical Industries, Ltd.[124],
the Japanese Supreme Court discussed this issue of experimental use exemption
and generic drugs. Section 69(1) of the Japanese Patent Law provides exemption
for "the working of the patented invention for experiment and research”.
Ono asserted that Kyoto Pharmaceutical is selling the drugs of same
efficaciousness as the patented drug during the patent term for the purpose of
obtaining data that accompany an application for the approval of manufacture
under section 14 of the Pharmaceutical Affairs Law . The Japan Supreme Court
decided that the use of drugs having the technical scope of the patented
invention is “working of the patented invention for experiment and research”
provided in Section 69(1) of the Japanese Patent Law and would not constitute
patent infringement because
a. The patent system is to encourage inventive activities by providing those who
disclose inventions with monopolizing rights for the use of the inventions
during a certain period of time, and give third parties opportunities to use the
disclosed inventions, so that it contributes to the development of industries.
In consideration of this, it is one of the basis of the patent system that after
the patent term expires, anyone should be able to freely use the inventions, so
that the society in general would benefit.
b. The Pharmaceutical Affairs Law stipulates that a prior approval by the
Minister of Health and Welfare is to be obtained for the manufacture of drugs
for ensuring safety, etc., and that upon carrying out various experiments, data,
etc. on the experimental results must accompany an application when requesting
such an approval. … If under the Patent law such experiments are not be
interpreted as “experiments” stipulated in Section 69(1) of the Patent Law
and therefore such manufacture, etc. are not possible during the patent term,
the third party cannot, as a result, freely exploit the invention for a
substantial period of time even after the term of the patent expires. This
result is against the basis of the patent system mentioned above.”
c. … If it is possible to exclude others from carrying out manufacture, etc.
for the experiments required in applying the patent term for a substantial
period of time, such extension of the patent term goes beyond what is expected
under the patent law as benefits to be given to the patentee.”
The examination of a series of decisions show that making in the patent acts has
never been recognized either in the USA or in the EC, the major user of patent
rights as absolute and literal sense and that making monopoly excludes others
from the commercial market place of the patent and not for the purpose which
would not affect the commercial market place of the patent holder and his profit
in the territory of the patent.
Offer to Sell and Export
Another important related issue is that of “offer to sell” introduced in the
US Patent Act s. 271(a) as a result of the TRIPS Agreement which Agreement
itself was the result US persistently ““sought to include” and which was
at the top of our (USA’s) trade agenda and was considered to be an essential
ingredient for a successful agreement” (GATT negotiations).[125] It has been
extensively discussed in 3DSys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 48
USPQ2D 1773 (Fed. Cir. 1998), Rotec Industries v. Mitsubishi International
Corporation (215 F.3d 1251) and in Quality Tubing v. Precision Tube Holdings (75
F. Supp. 2d 613), Cybotronics Ltd. v. Golden Source Electronics, Ltd., 130 F.
Supp. 2d 1152, 1167-73 (C.D. Cal. 2001), Cybotronics Ltd. v. Golden Source Elecs.,
Ltd. No. 99CV10522, 2001 WL 327826, at 8-9 (C.D. Cal., Feb. 26, 2001), Star
Scientific Inc. v. R. J. Reynolds Tobacco Co. 174 F. Supp. 2d. 388 (D. Md. 2001)
and in Recycling Sciences International, Inc. v. Soil Restoration &
Recycling, L.L.C.[126] in the USA. In Rotec, the government of the People’s
Republic of China (“PRC”) asked for bid proposals for five units of concrete
placings system to be used in the Three Gorges Dam Project on the Yangtze River.
Mitsubishi International formed a partnership with Potain, a French corporation
and C.S. Johnson. Johnson engaged Defendant Tucker Associates, Inc. as an
independent contractor to prepare the design work for the project. On 16th
December, 1996, Potain, Mitsubishi and TGDPC signed a purchase and sale
agreement of two of the complete concrete placing systems. Although the
agreement was between parties who had nothing to do with the USA but Rotec inter
alia asserted that
1. the offering parties met several times in the USA
2. A Chinese delegation visited Johnson’s headquarters in Champaign, Illinois
just before the agreement was signed
3. Tucker prepared pricing information and worked on finalizing design and
financial aspects of the bid proposal at his offices in Oregon
4. the offer provided that non-staple components were to be made in the USA by a
designated U.S. supplier.
In 1998, the District Court granted summary judgment motions to the Defendant as
the ground narrated by Rotec would not constitute “offer to sell” which had
been introduced in the US Patent Act which as per the Federal Court of Appeals
in Rotec, “the United States agreed to the broader protections provided by
others, suggesting that the amendment to s. 271(a) reflects the approaches of
the other signatory nations.” [127]
The observation of the Federal Circuit should be an eye opener regarding the
hypocritical and dissembling stance of certain countries, which used the TRIPS
negotiations to introduce amendment in their patent acts.[128]
Using Pfaff v. Wells Elecs. Inc., 525 U.S. 55 (1998) analysis of s. 102(b),
Federal court of Appeals concluded that norms of traditional contract law should
be the basis for s. 271 analysis and “the product must be subject of a
commercial offer for sale.” (Pfaff at 67, 48 USPQ2d at 1646). The majority in
the Federal Court of Appeal did not “reach the issue of whether patent
infringement under the “offer to sell” language requires that both the offer
and the sale it contemplates occur in the United States.”[129] Judge Newman in
her concurring judgment however, affirmed the decisions in Quality Tubing by
sating that “However, an offer to sell a device or system whose actual sale
can not infringe a United States patent is an infringing act under s. 271. …
It is clear, however, an infringing offer to sell, s. 271(i), must be of an item
that would infringe the United States patent upon the intended sale.”[130]
In Quality Tubing v. Precision Tube Holdings, 75 F. Supp. 2d 613 the court
agreed with the argument of Quality Tubing that offer to sell where actual sell
did not take place in the United States would amount to expanding the reach of
the United States laws into foreign markets, “placing an unfair burden on
United States companies in competing with companies that have foreign
plants.”[131] The court in Quality Tubing observed
“The secondary sources echo these arguments. As one commentator has noted,
“to prohibit [a] hypothetical N.Y. businessman from making the phone call [to
sell a German manufactured widget to an Australian customer] is to regulate
engagement in the legal act of foreign manufacturing and selling of a U.S.
patented product … The U.S. Patent holder would, in effect, obtain
international exclusive rights vis a vis American based businesses .” Edwin D.
Garlepp, An Analysis of the Patentee’s New Exclusive Right to “offer to
Sell”,” 81 J. Pat. & Trademark Society 315, 326 (1999). Chisum on
Patents notes that the "offer to sell” language extends the scope of a
patentee’s rights to unauthorized promotional activities that fall short of
actual sale, making or use.” 5 Donald S. Chisum on Patents s. 16.02[1], at
16-9 (1988).”[132] The court in Quality tubing made this point clear that the
expansion of the statute to include the earlier stage of an infringing activity,
the offer to sell as well as the actual sale, means that the sale for which the
offer is made must itself be an act of infringement. Deriving support from s.
271(I) which defines the offer to sell as “that in which the sale will occur
before the expiration of the patent.” 35 U.S.C. s. 271(i), the court observed
that “an offer to sell is infringing only if the sale it contemplates would
also be infringing.”[133] The court further observed that “Such a
construction avoids confusion over whether an offer to sell a product in a
foreign market, made during an international telephone call or in an electronic
mail transmission , or in or faxed in the United States, is an act of
infringement.”[134] Quoting Deepsouth Packing, 406 U.S. at 531, the Court in
Quality Tubing observed that a reading of the term “offer to sell” within
the United States to infringe s. 271(a) may be an impermissible expansion of the
territorial scope of U.S. patent laws. Garlepp, supra, at 326. The reading
Quality Tubing advocates “would place a burden on American businesses that
would not exist for foreign competitors, [and that] courts are sensitive to such
competitive burdens.” Garlepp, supra, at 326-27.”[135]
In Cybotronics, the court held that “liability under s. 271(a) does not extend
to “offers to sell” which do not contemplate actual “sales” of goods to
be consummated within the United States. The addition of the ”offer to sell”
language to 271(a) was not intended to add a whole new substantive basis for
liability to the [Patent Act] language to the [Patent Act], but … merely …
to incorporate into the state coverage of activities that might pre-date the
actual consummation of sale within the United States.”[136]
“Offer to sell” has been an issue in the European patent acts for quite some
time. In Kalman v. PCL Packaging (U.K.) Ltd., 1982 F.S.R. 406 (at 1982 WL
221922) the UK court decided that ”offers to dispose off” the patented
product “must be read as meaning “offers in the United Kingdom to dispose
off the product in the United Kingdom.” The relevant sections in the EC are
United Kingdom Patents Act 1977 s. 60 (banning “offers to dispose of”)[137],
French Patent Law art. 29 (forbidding “offer[s] to supply”); German Patent
Law s. 9 prohibiting both “offering” and “putting on the market”).[138]
In the UK, the offer to dispose off had been a matter of a number of judicial
decisions. Gerber Garment Technology Inc. v. Lecra Systems Ltd.,[139] decided in
1995 was actually used by majority in Rotec to suggest that even advertising
could constitute infringement under “offer to sell”. However, here the
actual sale and delivery had taken place in the United Kingdom and only confirm
that offer to sell is related to sell in the territory of the patent holder.
Justice Jacob in Gerber observed that Section 60 of the United Kingdom is
intended to have effect similar to the corresponding provisions in the Community
Patent Convention (CPC)[140] and not to reflect the English law of
contract.[141] Kalman v. PCL Packaging (UK) Ltd.[142] was cited by Judge Newman
in her concurrence in Rotec Industries.[143] In Kalman, PCL purchased filter
used in a plastics extruding process covered by Kalmans’ United Kingdom
patent.[144] Kalman sued both PCL and Berlyn, the US supplier for infringement.
Two filters were sold and delivered to PCL in Massachusetts with PCL responsible
for moving it to the United Kingdom and involved at least one communication
directly from Berlyn to PCL in the United Kingdom.
Justice Falconer in Kalman decided that the sale had taken place in the United
States noting :
“[the filters were sold by Berlyn corporation in the United States of America
f.o.b. shipping point. The sale was completed there, the title had passed to the
buyer and on delivery to the shipping points Berlyn Corporation had parted with
actual and constructive possession and had no rights thereafter in either
filter.”[145]
Regarding “offer to dispose” Justice Falconer observed that “If I am right
as to that, it seems to me that the expression “offers to dispose of” must
be read as meaning, ‘offers in the united Kingdom to dispose of the product in
the United Kingdom.’”[146]
In Benton v. Latour,[147] Justice Dillon observed
“What is said is that within Section 60 of the Patents Act, 1977, it is an
offer to dispose of the infringing machines; that is to say, an offer to dispose
of them or use in the United Kingdom. Justice Aldous, in his judgment, recorded
at page 5-G that it is settled that is section 60 only covers acts which take
place in the United Kingdom. He referred to a decision of Mr. Justice Falconer,
where Mr. Justice Falconer held that where the property and title to the goods
passed outside this country there was no disposal within the United Kingdom and
thus no infringement. Mr. Justice Aldous commented that, in Mr. Justice
Falconer’s case, the property passed in the United States and the goods were
sold FOB. As to the present case Mr. Justice Aldous considered that it was
wholly speculative as to whether any disposal of the Latour machines will take
place in the United Kingdom as opposed to France. Even if the letter can be
taken as an offer to dispose of the machines, it cannot be taken as an offer to
dispose of the machines in the United Kingdom, he said.”.
Whereas throughout Rotec Industries, the court argued that the USA in
recognition of the TRIPS Agreement which itself was based on similar provision
in certain European countries, the term “offer to sell” was introduced in
the US Patent Act, Sulkis[148] argued that offer to sell is not to be linked to
sell in its territoriality interpretation in terms of Adam v. Burke where the US
Supreme Court ruled that “[t]he right to manufacture, the right to sell, and
the right to use are each substantive rights, and may be granted or conferred
separately by the patentee”. He also quoted from the dissenting opinion of
Justice Blackmun in Deepsouth Packing noting
“If this Constitutional protection is to be fully effectuated, it must extend
to an infringement who manufactures in the united States and then captures the
foreign markets from the patentee. The Constitutional mandate cannot be limited
to just manufacturing and selling within the United States. The infringer would
then be allowed to reap the fruit of the American economy - technology, labor,
material, etc.-but would not be subject to the responsibilities of the American
patent laws. We cannot permit an infringer to enjoy these benefits and then
allowed to strip a portion of the patentee’s protection.”[149] to support
his extraterritorial extension of the US Patent Act without realizing that the
rejection of such extension by majority in Deepsouth means that export of
patented products manufactured in the USA would not amount to infringement of
the US Patent Act.
Use of International treaty to introduce changes in the domestic law
The issue of bringing export of patented products within the prohibition of
patenting monopoly as insisted by the USA,[150] Abbott[151] and Bildt[152] while
asserting that the TRIPS Agreement even with exemption under Article 30 of TRIPS
does not permit export of patented products to fulfill the requirements under
Article 31 of the TRIPS Agreement as against the existing provisions in the
internal or domestic law of these countries has a deeper and a wider
implications whether a country which considers it as its obligation to accept
the provisions in the international treaty as overriding its domestic provisions
is not resorting to extra–constitutional method of introducing changes in its
domestic law by forcing introduction of provisions or an interpretation of a
particular provision in international treaty like the TRIPS Agreement which is
not available in its domestic legal system. Whether members of the EC or country
like the USA follows the doctrine of direct effect where individuals could move
the court for implementations of the provisions of an international treaty
entered in by the countries concerned or accepts provisions of international
treaty as providing dominant context is a question that has been recently
discussed by a number of scholars.[153] However, the issue of Article 16.4 of
the GATT 1994 and Section 23.2(a) of the Dispute Settlement Understanding
directs such action by the nations concerned.
The effect of the provisions of the WTO and its various agreements and
understandings whether already present or attempted to be incorporated on Member
countries domestic law has two aspects. One is in terms of Article XVI:4 of the
GATT 1994 that enjoins
“each Member shall ensure the conformity of its laws, regulations and
administrative procedures with its obligations [under WTO Agreements]” and the
other Article 23.2(a) of the DSU which says “In such cases Members shall (a)
not make a determination to the effect that a violation has occurred that
benefits have been nullified or impaired or that attainment of objective of the
covered agreements has been impeded, except through recourse to dispute
settlement in accordance with the rules and procedures of this Understanding,
and shall make any such determination consistent with the findings contained in
the panel or Appellate Body report adopted by the DSB or an arbitration award
rendered under this Understanding.” A member of the WTO shall conform its laws
and regulations and administrative procedures to the provisions of the WTO and
its annexed Agreements and Understandings and also to the clarification of such
provisions by the Panel or Appellate Body. Article XVI:4 as per the US
explanation to the Panels’s question in U.S. Sections 301-310 says that
Article XVI:4 of the GATT 1994 “provides an overarching statement in the WTO
Agreements, clearly applicable to all annexed agreements and not just the GATT
1994, that no measures are grandfathered. Article XVI:4 thus serve to remove any
doubt which might have existed in its absence that all measures must be brought
into conformity as from January 1, 1995.”[154]
It has another implication that if the negotiating countries introduce provision
of law in the WTO or a particular interpretation, that would amount to
introducing a particular provision directly in its domestic law or indirectly
through its obligations in terms of Article XVI:4 of the GATT 1994. The
interpretation of Article XVI:4 was discussed by the WTO Panel in US Sections
301-310[155] where the EC argued that Article XVI:4 of the GATT 1994 provides
for a more far-reaching and novel obligation upon WTO Members when compared to
Articles 26 and 27 of the Vienna Convention on the Law of Treaties or to the
legal situation existing under the GATT 1947. GATT Article XVI:4 when read along
with Article 3.2 of the DSU provides certain important consequences.[156] These
are
a. A conflict between incompatible domestic legislation and any obligation under
the covered agreements must be resolved in favor of the latter. The Appellate
Body in India – Patents (US) stipulates that there is no exception to such
rule.[157]
b. The obligations under Article XVI:4 include legislation as well as
administrative procedures and domestic regulations which enjoin the executive
authorities to either modify their administrative instructions in the light of
international obligations.
c. The terms “ensure” and “conformity” in Article XVI:4 taken together
in their context and in terms of WTO’s object and purpose obliges all
executive authorities to act in consonance with WTO law and to structure their
law in a manner to ensure predictability that the provision of the covered
agreements will be achieved.
d. The principle of “good faith” as enshrined under Article 26 of the Vienna
Convention on the Law of Treaties along with Article 3.2 of the DSU requires
domestic legislation to be brought into conformity with the international
obligations.
The advisory opinion rendered by the International Court of Justice (ICJ) on
26th April 1988, stated unequivocally that “it is “the fundamental principle
of international law that it prevails over domestic law” and that “the
provisions of municipal law cannot prevail over those of a treaty.”[158]
However, the true position adopted by the proponents of the TRIPS and its
modifications is what has been pronounced by the ECJ in Portugal case. The
exception has been worked out by the ECJ in para 49, which is the most crucial
para for our discussion, This says
“It is only where the Community intended to implement a particular obligation
assumed in the context of the WTO, or where the Community measures refers
expressly to the precise provision of the WTO agreements, that it is for the
Court to review the legality of the Community measures in question in the light
of the WTO rules (See, as regards GATT 1947, Fediol, paragraphs 1 to 22, and
Nakajima, paragraph 31)”[159] Similarly, while dealing with effect of
international obligations accepted by the USA pertaining to the USA, it is only
those provisions which have been proposed by the USA and its allies are accepted
to be relevant.
The negotiating history of Article XVI:4 are important to throw light on the
actual meaning of this provision. The earliest text was prepared by Mr. Julio
Lacartye-Muro, Chairman of the Negotiating Group on Dispute Settlement on 19th
October 1990, which says
“The contracting parties shall:
(i) abide by GATT dispute settlement rules and procedures;
(ii) abide by the recommendations, rulings and decisions of the CONTRACTING
PARTIES;
(iii) not resort to unilateral action inconsistent with GATT rules and
procedures; and
(iv) for the purpose of (iii), undertake to adapt their domestic trade
legislation and enforcement procedures in a manner ensuring the conformity of
all measures with GATT dispute settlement procedures”.
The negotiating history of Article XVI:4 throw a proper light on the extent of a
WTO Member’s obligations to conform its domestic law as per the WTO
Agreements. The draft Agreement Establishing the Multilateral Trade Organization
stated in its Article XVI:4
“The Members shall endeavor to take all necessary steps, where changes to
domestic laws will be required to implement the provisions of the agreements
annexed hereto, to ensure the conformity of their laws with these
agreements”.[160]
However, the clause “best-endeavors” applicable only to cases requiring
changes to domestic laws was replaced by an unqualified obligation in the final
version of Article XVI:4 which says
“Each member shall ensure the conformity of its laws, regulations and
administrative procedures with its obligations as provided in the annexed
Agreements”.
The EC’s attempt to remove “endeavor’ with mandatory obligations were
objected to by the Brazil and other Latin delegations whose legal systems
provided for “direct incorporation” of certain international agreements into
their law and by Canada and the USA on the basis of federal system of government
which may have brought discrepancy in the language of Article XVI:4 and Article
XXIV:12 of GATT 1994 and GATS I:3(a) respectively which dealt with measures of
regional and local governments requiring national governments to take “such
reasonable steps as may be available to it” to ensure compliance. The EC then
proposed in November 1993 that “The Members shall take all necessary steps to
ensure the conformity of their laws, regulations and administrative procedures
with provisions of the annexed agreements, in accordance with their individual
constitutional or legal systems” which was rejected by the USA and others on
the basis that it would have weakened the duty under international law to
implement agreements.[161]
The EC on November 12, 1993 modified the proposal as
“The members shall ensure the conformity of their laws, regulations and
administrative procedures with the provisions of the annexed Agreements” The
draft Agreement Establishing the Multilateral Trade organization of 24 the
November 1993 incorporated the phrase “obligations as provided in the annexed
agreements” which was agreed to by the Members.
Kuyper, the EC legal expert and Chief GATT Lawyer the EC legal Service[162] did
try to explain to Brazil and others that it does not provide more obligations
than Article 26 of the Vienna Convention. In India – Patents (US), the
Appellate body observed that Article XVI:4 would be applicable to the TRIPS
Agreement by observing “India’s argument must be examined in the light of
Article XVI:4 of the WTO Agreement.”[163]
The other is regarding the degree of effect in terms of various Constitutional
as well as judicial pronouncements in member countries i.e. whether the
provisions of international treaties such as the WTO would have direct effect so
that private parties can move the courts for enforcement of the provisions of
the WTO and its sister agreements and understandings or whether these provisions
provide dominant context for domestic provisions interpretations including the
judicial interpretations in favor of international treaty provisions. In any
case, if the provisions have ‘preciseness’, they would be binding. There is
no doubt that major proponents of the WTO have all kept reservations in their
acts not to apply the provisions of WTO in their domestic law and countries like
the USA[164] has specifically provided in its law that the WTO provisions would
be irrelevant if it contradicts any of the domestic provisions of the USA.
However, the provisions either incorporated at the behest of the USA or its
allies i.e. the EC have always been incorporated in the domestic provisions
suggesting that the international treaty negotiations have been used to
incorporate the provisions in the domestic act as if these provisions have
direct effect. The issue is whether members of the WTO can push for provisions
in the international treaty which are not present in their domestic law and
thereby include such provisions in their domestic law apparently through an
excuse of their commitments and obligations to the said international treaty.
Such developments appear to be an extra-constitutional method of incorporating a
new provision or bypassing general law making procedures prescribed in their
law. Some of developments in the TRIPS Agreement such as incorporation of
‘import’, ‘offer to sell’ and extension of patenting period to 20 years
in the US Patent Act as apparently part of its commitment to the TRIPS Agreement
were introduced by the EC through its draft TRIPS Agreement.[165] The US
originally proposed patenting monopoly only for ‘making’, selling or using
monopoly but allowed itself to be persuaded to include ‘import’, ‘offer to
sell’ and the period of twenty years from the date of filing of the patent
application.[166] The Circuit Court in Rotoc observed
“In 1993, however, the United States completed negotiations on the TRIPS
Agreements. As a result of these negotiations, the United States agreed to amend
its patent law to impose additional infringement. Liability for “offers to
sell”. In 1994, Congress enacted a statute to satisfy the nation’s pledge
under TRIPS. The statutory language of the amendment to s. 271(a) provided that,
after January 1, 1996, “whoever without authority makes, uses, offers to sell,
or sells any patented invention, within the United States…. infringes the
patent.””[167] The concept of the US commitment to the TRIPS Agreement was
further elaborated by the Rotoc Court by noting that
“ …the amendment to s. 271(a) served to implement our nation’s commitments
to the TRIPS Agreements. Accordingly, we must recognize one of the Agreement’s
declared purposes: harmonizing worldwide patent law. See Lisda B. Martin &
Susan L Amster, International Intellectual Property Protection in the new GATT
Accord, 2 J. Proprietary Rights, 9, 9 (1993). Before the TRIPS Agreements, the
United States stood apart from its trading partners in limiting infringement
protection only to actual “sales” as opposed to “offers to sell.”
Indeed, our first draft proposal during the TRIPSD negotiations reflected our
unique approach in setting forth only “making, using or selling” patented
inventions as acts of infringement. See U.S. Draft Agreement on Trade –Related
Intellectual Property Rights, Presented as GATT Uruguay Round Negotiations in
Geneva May 14, 7 Int’l Trade Rep. (BNA) 708, 711 (May 16, 1990). Ultimately,
however, the United States agreed to the broader protections provided by others,
suggesting that the amendment to S. 271(a) reflects the approaches of the other
signatory nations.”[168]
The USA understood the problem associated with such extension of monopoly
through international treaty negotiations and subsequently claimed that the
patent amendment of its patent law was necessitated because of its international
obligations in TRIPS which was neither proposed by itself nor by the EC but was
at the instance of Arthur Dunkel[169] and the USA similarly accepted it through
SAA (Statement of Administrative Action) as its obligations to the international
treaty which was brought in the Uruguay Round by the USA and carried through by
use of Special Section 301 and another persuasive and sometimes coercive
methods. Daya Shanker has discussed this aspect of use of force and coercion by
the USA on developing countries to sign on the dotted line in his article
‘Legitimacy and the TRIPS Agreement’ (forthcoming)[170]. Daya Shanker[171]
and Amir Attaran[172] have discussed the role of Arthur Dunkel in the Agreement
leading to the TRIPS Agreement and how the whole agreement was turned into an
unilaterally imposed obligation for developing countries when each and every
proposal from the developing countries was removed by Arthur Dunkel and Anell
from the TRIPS Agreement. However, the fact that it was part of an understanding
and a very close one between the USA and the EC becomes apparent from the letter
from Commissioner Brettan mentioned in the Committee report[173].
In the present proposal pertaining to Para 6 Solution of the Doha Declaration
coming from the USA[174], no such inhibition has been shown by the USA. Its
proposal that Article 30, forget the whole of the TRIPS Agreement does not
permit export of patented product is introduction of ‘export’ as one of the
monopolizing extension of the US patent act through its incorporation in the
international treaty. Its advocacy by the EC, Canada and other Western countries
along with Japan point to the fact that that it is being done in a well
concerted manner.
In such circumstances proposing a particular interpretation and a new provisions
or a set of provisions not compatible with existing provisions would amount to
nothing but a unconstitutional method of law making in the domestic context.
Similarly using the Dispute Settlement System of the WTO to push for an
interpretation that is not available in the domestic legal system would amount
to misuse of the Dispute Settlement System to incorporate changes or obtain
interpretations through extra-constitutional methods. The initiation of dispute
by the EC in Canada-Patent Protection likewise appear to be an attempt to
overrule the decision of the German Supreme Court which had interpreted the
experimental use provision in the Community Patent Convention (CPC) as providing
unlimited manufacturing to gain the regulatory approval because the experimental
use can be done for any purpose. The question of direct effect was discussed by
the Panel in United States – Sections 301-310 of the TRADE Acts of 1974.[175]
The USA argued that international obligation statute in its law and the
Constitution removes any danger of presence of any act violative of WTO
obligations. The Panel in US-Sections 301-310 rejected this notion by giving the
example in the EC “where EC norms may produce direct effect and thus give far
greater assurance, an EC Member State is not absolved by this fact from its duty
to bring national legislation into compliance with its transnational obligations
under, say, an EC directive (Commission v. Belgium, Case 102/79, [1980] European
Court Reports 1473 at para 12 of the judgement.”[176]
The question of extent of effect of international treaty obligations on domestic
laws has been dealt with by Eeckhout, P.,[177] Berkey[178], Petersmann[179],
Hilf[180], Kuilwijk[181] and Conway[182]. Normally there are four principles
governing domestic legal effect of international agreements. These principles
are (a) direct application, (b) direct effect, (c) supremacy and (d)
interpretation. The ECJ did not grant direct effect in case of International
Fruit company, an Article 177b preliminary reference decision prohibiting
individuals to enforce GATT 1947 provisions because the agreement lacked direct
effect. Berkey found that although the ECJ adopted “a monist conception of
direct application so that international agreement and Community law form part
of a single legal system”[183] it did not follow this concept with respect to
GATT 1994 because GATT 1994 does not provide preciseness and predictability.
The European Court of Justice held that since ‘GATT 47’ is based on
principles of negotiations undertaken on the basis of “reciprocal and mutually
advantageous arrangements,” [and] is characterized by the great flexibility of
its provisions in particular those conferring the possibility of derogation from
the measures to be taken when confronted with exceptional difficulties, and the
settlement of conflicts between the contracting parties’, GATT 47 did not
provide direct effect rights to individuals which could be invoked in the
national courts.[184] This argument was used by ECJ to decide that member States
could not enforce the GATT 47 provisions in Article 173(1) actions before the
ECJ.[185] However, the ECJ held that GATT 47 and by implication GATT 1994
provisions could be used to interpret the meaning of Community legislation like
anti-dumping which expressly referred to those provisions[186] as the regulation
was adopted in accordance with existing international obligations, in particular
those arising from Article VI of the General Agreement and from the Anti-Dumping
Code’.[187]
The DSU does not appear to have replaced intergovernmental negotiations as
discussed by Lee and Kennedy,[188] where the dispute between Japan and the USA
over Car and Car parts was resolved through negotiated settlement which suggests
that ‘far from becoming a strictly legal device, the dispute resolution system
retains its flexible nature and that negotiation, rather than formal legal
complaint, will remain the most common form of conflict resolution.’
The Helms-Burton Act, which took effect on 12 March 1996, granted private right
of actions against foreign companies that ‘traffic’ in property confiscated
by the Cuban government from US nationals. The EC filed a WTO complaint leading
to the formation of a panel but the USA insisted on boycotting the panel because
it did not ‘believe anything the WTO says or does can force the U.S. to change
its laws’.[189]
While the USA has specifically directed that GATT 94 provisions would not have
direct effect[190], Japanese Courts including its Supreme Court have decided
that ‘a violation of a provision of GATT pressures the country in default to
rectify the violation by being confronted with a request from another member
country for consultation and possible retaliatory measures. However, it cannot
be interpreted to have more effect than this. Therefore, it cannot be held that
the legislation in question is contrary to the GATT and null and void.’[191].
Berkey’s article was essentially a critique of Kuilwijk[192] who alleged that
ECJ is doing nothing but trying to follow a protectionist agenda to oblige its
domestic industry and his arguments were essentially based on the academics like
Bello and others known for their conservative views.[193]
Jackson has however argued that adopted Panel Reports are legally binding and
that 11 clauses of the DSU support the notion that a panel report imposes an
international law obligation on the members to perform the recommendations of
the panel particularly in violation cases.[194] The Commission’s proposal
stated that
“It is important for the WTO Agreement and its annexes not to have direct
effect [because] without an express stipulation of such exclusion in the
Community instrument of adoption a major imbalance would arise in the actual
management of the obligations of the Community and other countries.”[195]
As against Berkey, Conway has held that international agreements have direct
effect in EC law, that is, they do not need “Community implementing
legislation to be justiciable before the Community Courts.[196] McGoldrick also
argued on line of Berkey that direct effect to be effective is that the
provisions should be clear, precise and affording individual rights.[197]
Although, ECJ made an exception to direct effect in case of application of
provisions of GATT 1947[198] and correspondingly GATT 94 but held that if the
regulations are adopted in accordance with international obligations, ‘in
particular those arising from Article VI of the General Agreement and from the
Anti-Dumping Code’[199], the direct effect on the EC domestic law would be
applicable. The patenting provisions in the EC thus would qualify to be directly
applicable in the members domestic patent law.
Conway identified some of the instances showing direct application of
international treaty by the ECJ (or the Court of First Instance).[200]
Broek[201] has discussed some of the pronouncements of the ECJ in this respect.
Some of the recent pronouncements of ECJ in the field of application of
provisions of GATT and its interpretations are discussed in Portuguese Republic
v. Council,[202] Parfums Christian Dior v. Tuk Consultancy[203] and
Schieving-Nijstad v. Robert Groenveld[204],. In Portuguese Republic, the
Portuguese Government claimed that there was a breach of rules and fundamentals
principles of the WTO in particular those of GATT 1994, the ATC (Agreement on
Textiles and Clothing) and the Agreement on Import Licensing Procedures. It
further observed “Although the Court (The ECJ) held in Case C-280/93 Germany
v. Council 1994 ECR I-4973, paragraphs 103 to 112, that the GATT rules do not
have direct effect and that individuals cannot rely on them before the courts,
it held in the same judgment that that does not apply where adoption of the
measures implementing obligations is assumed within the context of the GATT.
The EC practice had two implications. Where the member countries have power to
negotiate and conclude an agreement with a non-member country, they are free to
agree with that country regarding the effect the provisions of the agreement are
to have in internal legal order. All the EC members have signed the WTO
Agreement in their individual capacity. The ECJ also noted that in terms of
general rules of international law there must be bona fide performance of every
agreement although each contracting party is “free to determine the legal
means appropriate for attaining that end in its legal system., unless the
agreement, interpreted in the light of its subject mater and purpose itself
specifies those means[205] (Hauptzollamt Mainz v. Kupferberg 1982 ECR 3641, para
18).
The main argument of the Portuguese decision was based on the possibility in
Article 22(2) of arriving at a mutually acceptable compensation which would
deprive “the legislative or executive organs of the contracting parties of the
possibility afforded by Article 22 of that memorandum of entering into
negotiated arrangements even on a temporary basis. (para 40) and the scope for
manoeuvre enjoyed by their counterparts in the Community’s trading partners (para
46).”[206] Thus the ECJ decided that “having regard to the nature and
structure “of the WTO agreements and “in the light of their subject mater
and purpose”, the WTO agreements are not “among the rules in the light of
which the Court is to review the legality of measures adopted by the Community
institutions.”[207] The ECJ also used the final recital in the preamble to
Decision 94/80[208] to support its contention that “the Agreement establishing
the World Trade Organization including the annexes thereto, is not susceptible
to being directly invoked in Community or member State Courts”[209]
In Dior v. Tuk, the ECJ reiterated its position in Portuguese Republic by
asserting that the provisions of the WTO Agreement is not among “the rules in
the light of which the Court is to review measures of the Community institutions
pursuant to the first paragraph of Article 173 of the EC Treaty (now, after
amendment, the first paragraph[ of Article 230 EC)”[210] although the
international agreement in general “must be regarded as being applicable when,
regard being had to working, purpose and nature of the agreement, it may be
concluded that the provision containing a clear, precise and unconditional
obligation which is not subject , in its implementation or effects, to the
adoption of any subsequent measure ( See, in that regard, Case 12/86 Demirel v.
Stadt Schwabisch Gmund 1987 ECR 3719, paragraph 14, and Case C-162/96 Racke v.
Hauptzollamt Mainz 1998 ECR I-3655, paragraph 31)”
Broek tried to read more in Dior v. Tuk, but the ECJ’s interpretation of
application of TRIPS Article 50(6)[211], it is nothing but reiteration of the
ECJ’s position in Portuguese Republic. While interpreting Dior v. Tuk in
Schieving-Nijstad v. Robert Groenveld, the ECJ again reiterated “that the
provisions of TRIPS do not have direct effect, in as much as they are not such
as to create rights upon which individuals may rely directly before the national
courts by virtue of Community law”[212]. The arbitrary discrimination
introduced in its Article 228(2) of the Treaty which say that “the member
states are bound, in the same manner as the institutions of the Community, by
the international agreements which the latter are empowered to conclude they
fulfil, in ensuring respect for Commitments arising from an Agreement concluded
by the community institutions, an obligation not only in relation to the
non-member country concerned but also and above all in relation to the Community
which has assumed responsibility for the due performance of the agreement” by
the ECJ is nothing but the introduction of realpolitik in the international
legal relations as has been consistently done by the US Courts. The decision in
Hauptzaullamt[213] by the ECJ appear to have been overturned in case of the GATT
1994 and the related agreements merely confirms that the latter decisions
excluding the WTO Agreements along with its annexes depended a lot on the nature
of obligations rather than the nature and structure of the WTO which prevented
the ECJ from permitting direct effect of the WTO Agreements. Broek[214] also
suggested that the grounds which the ECJ constructed to distinguish the WTO
Agreements along with its other annexes are similarly present in practically all
the international treaties, the EC has entered into the Yaounde Convention[215]
and the EC-Morocco Cooperation Agreement[216] and many other similar treaties
are examples which show that excluding provisions of the WTO along with its
annexes from any direct application when “the WTO system has actually
restricted the possibilities for parties to use negotiations to reach
solutions”[217] is the indulgence of the WTO in realpolitik rather than
“depriving the legislative or executive organs of any legal marge de Manoeuvre.”[218]
Judgments of these commercial courts do not appear to be based on valid legal
interpretations but rather on political considerations. Broek also reached the
same conclusion.[219]
The Panel in US-Sections 301-310 confirmed that Article XVI:4 goes beyond
Article 27 of the Vienna Convention in requiring WTO Members actually to ensure
the conformity of its internal laws with its WTO obligations and not merely to
precluding pleadings conflicting domestic law with its WTO obligations. The
Panel in US Sections 301-310 observed “The three types of measures explicitly
made subject to the obligations imposed in the WTO Agreements – “laws,
regulations and administrative procedures” – are measures that are
applicable generally: not measures taken necessarily in a specific case of
dispute. Article XVI:4, though not expanding the material obligations under WTO
Agreements, expands the type of measures made subject to these obligations.”
Although the Tokyo Round Agreement on government procurement subsidies,
licensing procedures, civil aircraft and anti-dumping each contained provisions
similar to Article XVI:4 which have been taken over into the final provisions of
the corresponding WTO Agreements while Article XVI:4 extends the WTO-conformity
requirement to all agreements and legal instruments in Annexes 1, 2 and 3 of the
WTO Agreement as per Article II.1 of the WTO Agreement.[220] In the
international law, states are generally free to chose manner of
implementation[221] but not formally, it is to ensure that its laws, regulations
and administration procedures are in compliance with its obligations.
In US Sections 301-310, the US tried to explain the meaning of Article XVI:4 of
GATT 1994 by discussing the dictionary meaning of “ensure” which is “make
certain” or ”make sure” (Oxford English Dictionary). As per the USA,
“Members were thus required, as of January 1, 1995, to review and make
certain, to make sure, that existing laws, regulations and procedures confer
with the substantive obligations in the annexed Agreements, and where they did
not, to bring them into conformity. … In reinforcing the date by which members
had an affirmative obligation to bring into conformity, Article XVI:4 makes it
clear that existing laws and regulations not in conformity had to be changed,
that no such measures would be “grandfathered.””[222] This point was
repeatedly raised by the EC also that unlike “existing legislation” clause
of the PPA (Proposal of Provisional Application in GATT, 1947), an opposite
obligation has been enshrined in the GATT 1994 by “the Uruguay Round
participants according to which the conformity of the domestic (even
pre-existing) legislation must be ensured as from 1 January 1995.”[223]
A very important observation was made by the USA regarding role of travaux
preparatories in the WTO Agreement “that there was no decision to create any
official travaux preparatories for the Marrakesh Agreement Establishing the WTO.
The discussions of October and November 1993, when the most contentious and
politically sensitive issues in the WTO Agreements text were settled, were
conducted originally in small meetings that did not include all delegations.
Some issues, including the final wording of Article XVI:4, were resolved in
plurilateral working groups that were smaller still. When the plurilateral
subgroups reported to the larger Institutions Group, some delegations objected
to have written documents become part of a negotiating history its importance
would be such that its contents would have to be negotiated line by line, and
this added burden was clearly impossible given the November 15, 1993 deadline
for finishing the Institutions Group’s work. In any event, absent a complete
picture of every note and proposal from every delegation, it would be difficult
to obtain an accurate picture of the parties’ intentions. For these reasons,
the Chairman, Ambassador Julio Lacarte, announced during these discussions that
no negotiating history would be issued and all trade-offs had to be made in the
text of the agreement itself.”[224]
US position of Effect of International Treaty Provision
Jackson[225] has discussed the question of applicability of international treaty
obligation of the USA in various articles. The US position of effect of
provisions of International treaty in spite of Article XVI:4 of the WTO and
various provisions existing in different annexes and understandings are quite
different. The courts in the USA have ensured that the position of US Government
in selectively using the provisions of international obligations does not get
compromised because of a number of decisions of the WTO Panel and the US
judicial courts. The USA is not the signatory of the Vienna Convention which
point the USA kept on emphasizing throughout the dispute in US Sections 301-310.
However, those provisions brought by the USA itself or its allies such as the EC
and other predominantly Western countries favoring the monopolies in the name of
intellectual property are immediately absorbed in the national domestic laws
whereas the provisions having unpreferable international obligations are somehow
never find their place either in the legal system or through their
interpretations by the commercial courts. In US Sections 301-310, the panel
after coming to the conclusion that Sections 301-310 is in violation of the
provisions of the WTO ranging from Article XVI:4 of the GATT 1994 and Article
3.2 and 23 of the DSU, came to the conclusion that the undertaking given by the
USA that it would not use its provisions in violation of the WTO is sufficient
to make the violative provisions non-violative. The approach of the Panel was
inconsistent with its previous insistence in India-Patent Protection of
attempting to introduce “solid legal foundation” in view of the fact that
Section 102(a) of the US Uruguay Round Agreements Act 1994 stipulates that
“(1)UNITDE STATES LAW TO PREVAIL IN CONFLICT – No provision in any of the
Uruguay Round Agreements, nor the application of any such provision to any
person or circumstance, that is inconsistent with any law of the United States
shall have effect.
(2) Construction. –Nothing in this Act shall be construed -…
(C) to limit any authority conferred under any law of the United States,
including section 301 of the Trade Act of 1974 unless specifically provided for
in this Act”.
The Panel in US Sections 301-310 observed that
“We note, however, that even if one were to hold that, pursuant to Section
102(a), the WTO agreements and the Uruguay Round Act itself could not, and did
not, curtail the USTR’s discretion under Section 304, in our view, the US
Administration itself could do so, and did so, interalia, in the SAA. It did so
validly by means of exercising discretion granted to it under the statutory
language of Section 304.”
The prurient and contradictory approach adopted by the Panel in US Sections
301-310 as against the decision in Panel Report and confirmed by the Appellate
Body in India-Patent Protection where the question of “sound legal
foundation” for an internal law to be WTO consistent is reflected by further
observation where the Panel says
“Admittedly, some of the language in the SAA appears ambivalent. We note
however that following US constitutional law, cases of ambiguity in the
construction of legal instruments should, where possible, always be resolved in
a manner consistent with US international obligations. We find that it is
possible to do so in this case.”[226]
The concerned paragraph in SAA is in pp. 366-367 which says
“There is no basis for concern that the Uruguay Round agreements in general,
or the DSU in particular, will make future Administrations more reluctant to
apply section 301 sanctions that may be inconsistent with U.S. trade obligations
because such sanctions could engender DSU-authorized counter-retaliation.
Although in specific cases the United States has expressed its intention to
address an unfair foreign practice by taking action under section 301 that has
not been authorized by the GATT, the United States has done so infrequently. In
certain cases, the United States has taken such action because a foreign
government has blocked adoption of a GATT panel report against it.” Such
assertion makes it difficult to accept the perception of the Panel in US
Sections 301-310 as providing “sound legal foundation” to the WTO
compatibility of the domestic US law.
The most important decisions that is the backbone of the Panel’s argument in
Sections 301-310 is Murray v. Schooner Charming Betsy, 6 U.S. (2 Cranch) 64, 118
(1804) which merely says
“an act of Congress ought never to be construed to violate the law of nations
if any other possible construction remains”. The incongruity of this
constitutional legal obligations as providing supremacy of international
obligations over internal domestic law is evident from an examination of
Footwear Distributors and Retailers of America v. United States, 852 F. Supp.
1078, 1088, appeal dismissed , 43 F.3d 1486 (Table) (Fed. Cir. 1994) citing
DeBartolo Corp. v. Florida Gulf Coast Building and Trades Council, 485, U.S. 568
(1988)” and Hyundai Electronics Co. v. United States 53 F. Supp. 2d 1334
(1999).
Although the US has not shown systematic regard either directly or through its
courts for the international obligations contained in the WTO and the TRIPS
Agreement in its domestic acts, it has selectively incorporated the provisions
particularly those either promoted by the USA itself or promoted by its allies
such as the EC or Switzerland to claim that these selective incorporations are
in response to its international obligations to fulfill its international
obligations and commitments as discussed in Rotec.[227] In this respect the
proposal put forward by the USA which does not have any basis in its own patent
Act amounts to changing its patent laws through the use of international
negotiations.
In Hyundai, the report of the WTO was issued only after the briefing period has
been concluded but the Court of International Trade took the issue of
application of the provisions of international treaty to the US domestic
legislation virtually on its own “because it is particularly relevant to scope
of U.S. international obligations.”[228]
The WTO Dispute Panel found that the US Department of Commerce’s “not
likely” requirement violates WTO rules.[229]
The main point of contention was the presence of term “not likely” as
against “likely” in Article 11.2 of the Antidumping Agreement.[230] The
Panel observed that
“6.45 We consider that a failure to find that an event is "not likely”
is not equivalent to a finding that the event is “likely”. We see a clear
conceptual difference between establishing something as a positive finding, and
failing to establish something as a negative finding. It is perfectly possible
that one could not determine that someone was unlikely to dump and find that
they were also likely to dump. But the former determination does not, in and of
itself, amount to a demonstrable basis for concluding the latter. This is
evident from the fact that the former finding is manifestly compatible also with
the reverse of the latter situation i.e., it is perfectly logical to find that
you cannot determine that someone is unlikely to dump, yet also be unable to
determine that they ere actually likely to dump. In other words, determining
something is not “not likely” is entailed by, but does not itself entail,
that something is likely”
6.46 . . .
6.47 Given this reality, it priori possible that situations could arise where
the not “not likely” criterion is satisfied but where the likelihood
criterion is satisfied but where the likelihood criterion is not satisfied.
Reliance on the not likely criterion clearly fails to provide any reliable means
to avoid or preclude this law. Given such a fundamental law, it cannot
constitute a demonstrable basis for consistently and reliably determining that
the likelihood criterion is satisfied.”[231]
The main reason for Hyundai court to introduce the analysis was to show that
these reports do not have binding effect was that the URAA s. 129 (codified as
19 U.S.C s. 3538) precluding the binding effect of such report.[232] After
quoting Charming Betsy, and referring to Federal Mogul Corp. v. United States,
Fed. Cir. (T), 63 F. 3d 1572, 1581 (1995), Footwear Distributors, 18 C.I.T. at
410, 852 F. Supp. at 1093, the interpretation arrived at by the US courts have
been that a conflict between an international obligation and U.S. law, “an
unambiguous statute will prevail over the international concern.”[233] The
reliance on Footwear Distributors and Retailers of America v. United States, 18
C.I.T. 391, 852 F. Supp. 1078 (1994) that as adopted GATT panel decision cannot
govern the outcome of the case and “however cogent the reasoning of the GATT
panel”, judicial relief cannot get attached in the US judicial courts. The
reference to Footwear decision by the Panel in US Sections 301-310 as implying
the US Government’s undertaking of complying with its international
obligations under the WTO is to say the least quite inconsistent as the
arguments by the US in this case and the judgment of the court suggests
something entirely opposite. While dealing with the US argument that the
Footwear court was without authority to give effect to the 1991 GATT panel
decision where the US argued
“ …The Government is arguing that the agency’s interpretation of our
countervailing duty law should prevail because it is in accordance with the
statutory language, the statutory language prevails over any provision of the
GATT, and in interpreting our domestic law, the agency charged with the duty of
implementing the law is entitled to deference rather a GATT panel’s opinion of
our domestic law. See Chevron U.S.A. v. Natural Resources Defense Council, 467
U.S. 837 (1984); Suramerica de Aleaciones Laminadas, C.A. v. United Sates, 966
F.2d 660 (Fed. Cir. 1992); 19 U.S.C. s. 2504(a) (stating that no provision in
any trade agreement, nor the application of any such provision to any person or
circumstance, which is in conflict with any statute of the United States shall
be given effect under the laws of the United States); S. Rep. No. 249, 96th
Congress, 1st Sess. 36 (1979) (explaining that the intent of section 2504(a) is
to preclude any attempt to introduce into U.S. law new meanings which are
inconsistent with U.S. legislation and which were never intended by
Congress)[234]
On the basis of DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Const. Trades
Council, 485 U.S., 574-75 (1988) the Footwear Court observed that Charming Betsy
would override Chevron.[235]
The Footwear Court discussed the opinion of Court of Appeals for the Fifth
Circuit in Mississippi Poultry Ass’n, Inc. v. Madigan, where the U.S
Department of Agriculture and its counsel from the Department of justice in
Washington relied on the US’s international obligations, in particular, GATT,
the Uruguay Round of Multilateral Trade Negotiations and even the United
States-Canada Free Trade Agreement. (922 F.2d at 1365. The court in Footwear
observed that “That ruling (Second Panel’s ruling) emanates from the GATT
itself, which the Restatement (Third) recognizes as “an international
agreement, but its status as international law cannot be stated simply. Like
other agreements, it is binding upon states that are parties to
it”[236].”[237]
The Footwear Court also observed that
GATT “including its clause regarding most-favored nations, became part of U.S.
Law via executive order in accordance with congressional delegation of power to
the President. See Reciprocal Trade Agreements Act, as amended and extended, 59
Stat. 410 (1945). And it is well established that an international agreement or
treaty which operates without the aid of legislation is “equivalent to an act
of Congress and, while in force, constitute a part of the supreme law of the
land.” Chew Heong v. United States, 112 U.S. 536, 540 (1884), citing Foster v.
Neilson, 27 (2 Pet.) U.S. 253, 314 (1829). See also U.S. Const. Art VI.”[238]
However, while discussing the role of the Dispute Settlement Body, the court
observed that “this significant change (change in approach of DSU as compared
to Panel’s position in GATT, 1947) is not accompanied by any provision that
panel decisions, even though affirmed by the appellate body adopted by the DSB,
are binding on the parties. .. The contrast comes further in to focus when the
provisions of General Agreement and of the Understanding are compared with
chapter 19 of the North American Free Trade Agreement which adopts the same
chapter in the United States-Canada Free Trade Agreement and specifically
provides that decisions of panels reviewing antidumping and countervailing
–duty determinations of the three contracting governments are binding. See
arts. 1904 paras. 9. Moreover, panels constituted under these agreements are
empowered to construe the law under which those kinds of duties were
levied.”[239]
The Court in Footwear observed
“However, cogent the reasoning of the GATT Panels reported above, it cannot
and therefore does not lead to the precise domestic, judicial relief for which
the plaintiff prays. That is, that relief simply does not attach. Rather, a
party in Brazil’s position, having sought and obtained a favorable panel
ruling, has and has had relief available to it via suspension of its obligations
to the offending party pursuant to Article XXIII of the General Agreement. See,
e.g., Netherlands Measures of Suspension of Obligations to the United States, 8
Nov. 1952, GATT BISD 32 (1st Supp. 1953); Netherlands Action Under Article
XXIII:2 to Suspend Obligations to the United States, 8 Nov. 1952 (L61), GATT
BISD 62 (1st Supp. 1953).”[240]
The most controversial aspect of the interpretation by CIT of Footwear and US
Section 301-310 in Hyundai is
“ Absent any other rationale, this amounts to an effective presumption that in
the absence of a finding that recurrence of dumping is ‘not likely’, anti
dumping duties may continue to be imposed. But ‘presumption’, by definition,
exists only where there is no requirement of justification or proof. As such, it
is manifestly irreconcilable with the requirements of meeting a standard of
necessity which involves demonstrability on the basis of the evidence adduced.
In light of this, we are unable to find that the section 353.25(a)(2)(ii) ‘not
likely’ criterion provides any demonstrable basis on which to reliably
conclude that the continued position of the duty is necessary to offset dumping.
For these reason, we find that the section 353.25(a)(2)(II) ‘not likely’
criterion operates to effectively require the continued imposition of
anti-dumping duties, and prevents revocation, in circumstances inconsistent with
and outside of those provided for in Article 11.2. accordingly, we find that
section 353.25(a)(2)(ii) constitutes a mandatory requirement inconsistent with
Article 11.2 of the AD Agreement.”[241]
Lester[242] analyzed the CIT’s entirely opposite interpretations of ‘not
likely’ standard in the US antidumping act where the CIT insisted that the
‘not likely’ standard was consistent with the United States’ international
obligations under Article 11.2 of the Anti-Dumping Agreement.
Both the judgement essentially show the extraordinary role the US commercial
courts have played in lessening the US international obligations against the
accepted interpretations discussed in Restatement (Third). It says
“The United States and its courts and agencies …, are bound by an
interpretation of an agreement of the United States by an international body
authorized by the agreement to interpret it.”[243] According to Lester,
“Contrary to the statement made by the Footwear distributors court, adopted
Panel and Appellate Body interpretations are, in fact, finding on the parties to
the dispute when adopted by the DSB.”[244] There has been some recent
judgements treating WTO provisions as providing certain context but they are
quite limited in its scope.[245] Jackson[246] has also argued that an adopted
panel report “established an international law obligation upon the member in
question to change its practice to make it consistent with the rules of the WTO
Agreement and its annexes”.
Direct Effect and the EC
The concept of compensation as diminishing binding nature of the dispute
settlement system, was discussed by Berkey[247] in connection with the direct
effect of international agreement on the internal law of the EC and has been
followed by the ECJ in case of Portugal. However, Articles 3.7 and 22.1 of the
DSU, the relevant Articles dealing with compensation says
Article 3.7 “ … the first objective of the dispute settlement machinist is
usually to secure the withdrawal of the measures concerned … [C]ompensation
should be resorted to only if the immediate withdrawal of the measure is
impracticable …”.
Article 22.1 “Compensation and the suspension of concessions or other
obligations are temporary measures available in the event that the
recommendations and rulings are not implemented within a reasonable period of
time. However, neither compensation nor the suspension of concessions or other
obligations is preferred to full implementation to bring a measure into
conformity with the covered agreements.”
This provision cannot be interpreted that adverse rulings are not binding.
Lester gave the example of witness testimony where a witness can decide not to
testify and go to the jail would not suggest that regardless of compliance, the
domestic orders are not binding. Lester appears to be quite right in his
assertion that “The possibility that a decision will not be obeyed is not
relevant for determining whether the legal interpretation of a dispute
settlement Panel is binding.”[248]
The two interpretations are quite curious that the CIT’s interpretation of
accepting the provisions of Antidumping Agreement and other Agreements of the
WTO as well as international obligations of the United States while at the same
time insisting that their interpretations or clarifications are not binding.
Conclusion
When developing countries proposed Article 30 solution in para 5 and 9 in their
Draft Ministerial Declaration on the TRIPS Agreement and Public Health on 4th
October, 2001[249] to fulfill the requirements of the compulsory licensing
issued in the countries with no or insufficient manufacturing capacities, nobody
could visualize that this proposal would end up in virtual rewriting of the
TRIPS Agreement through incorporation of right to exclude export as one of the
rights of the patenting monopolies without its presence either in the domestic
laws of the major dominating countries or in Article 28.1 of the TRIPS
Agreement. The US insistence that Article 30 of TRIPS would not permit export of
patented products was accepted by Mr. Eduourdo Perez Motta, the Chairman of the
TRIPS Council who removed any mention of Article 30 from his Draft Proposal
(Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement
and Public health: Draft legal language for General Council Discussion dated
19/11/2002) at Sydney Ministerial Meet and included a series of regulations to
control the movement of products to be manufactured for export under amended
Article 31(f) of TRIPS not permitted by the TRIPS Agreement or by the Panel
report (discussed in Canada Patent-Protection) interpreting the provisions of
the TRIPS Agreement. The analysis here suggests that the US proposal based on
the premise that exemption under Article 30 of TRIPS do not permit export
essentially amounts to extending rights to exclude export as one of the patented
rights which rights has never been given to the patent holder either in the
domestic patent laws of the major proponents of TRIPS or in Article 28.1 of the
TRIPS Agreement. The detailed examination of a number of judicial decisions in
the USA, the EC and Japan, major proponents of the patenting monopoly confirms
that the patenting monopoly cannot be extended to the export. This result is
also confirmed by the presence of the right to exclude others from exporting
patenting products in the Plant Variety Protection Act of 1970 (PVPA) and the
amendment of Sections 271 by introduction of Section 271(f) to exclude export of
components which when assembled abroad would violate the patent in the USA. The
analysis suggests that patenting monopolies related to export such as
“making” and “offering to sell” also do not prohibits export of patented
products because of the fact that patenting provisions covering “making”
have never treated this exclusion as absolute and “offer to sell” is related
only to those sell which would make it an infringement of the patent laws in the
territory of the patent is the relevant right granted under various patent laws.
Only that aspect of making that affects the profit of the patent holder in the
territory of the patent. The most crucial issue coming out of the US and the
EC’s attempt to introduce the extension of patenting monopoly to export is the
effect of the provisions of the international treaty on the domestic rules and
regulations. Article XVI: 4 of the GATT 1994 which enjoins the WTO members to
conform their rules, regulations and administrative instructions to the
provisions of the WTO and its annexed agreement and understandings but the
provision has been interpreted as “… the WTO agreements, interpreted in the
light of their subject-mater and purpose do not determine the appropriate legal
means of ensuring that they are applied in good faith in the legal order of the
contracting parties,”[250] However, the major clarification came in para
49[251] of the same decision where the ECJ observed “It is only where the
Community intended to implement a particular obligation assumed in the context
of the WTO, or where the Community measure refers expressly to the precise
provisions of the WTO agreements, that it is for the Court to review the
legality of the Community measure in question in the light of the WTO rules.”
Similarly, the USA through section 102(a) the US Uruguay Round Agreements Act
1994 declared that “No provision in any of the Uruguay Round Agreements, nor
the application of any such provision to any person or circumstance, that is
inconsistent with any law of the United States shall have effect” although
Restatement (Third) which has been found to be persuasive by the Supreme Court
in Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993) says “Like other
agreements (International), it is binding upon the states that are parties to
it” and makes the “international agreement or treaty which operates without
the aid of legislation as “equivalent to an act of Congress and, while in
force, constitute a part of the Supreme law of the land”[252]. The net effect
of such legislative presence and interpretation is that those legislations which
are promoted by these counties is treated as binding on the law of the land
while provisions of those international agreements promoted by others are
treated as not relevant in the domestic context. It essentially amounts to
saying that those provisions introduced by the USA or the EC in the
international agreements would be binding on the domestic regulations which
makes every such provision such as the attempt to introduce export as
introduction of additional patented rights in the domestic patenting law, the
right which was not present in the existing internal provisions, through extra
constitutional method of law making using international negotiations and
international agreements.
[Continued on page 2]
[Page 1 | Page 2]
NOTES
[1] Ministerial Declaration on the TRIPS Agreement and Public Health, WTO/IP/C/W/312, WT/GC/W/450 dated 4 October 2001, paragraphs 5 and 9 of which saysPara. 5. A compulsory license issued by a Member may be given effect by another Member. Such other member may authorize a supplier within its territory to make and export product covered by the license predominantly for the supply of the domestic market of the member granting the licence. Production and export under these conditions do not infringe the rights of the patent holder.
Para. 9. Under Article 30 of the TRIPS Agreement, members may among others, authorize the production and export of medicines by persons other than holders of patents on those medicines to address public health needs in importing Members.” The proposal was signed by the African group, Bangladesh, Barbados, Bolivia, Brazil, Cuba, Dominican Republic, Ecuador, Cuba Haiti, Honduras, India, Indonesia, Jamaica, Philippines, Peru, Sri Lanka, Thailand and Venezuela
[2] Declaration on the TRIPS Agreement and Public Health, Ministerial Conference, Fourth Session, Doha, 9-14 November, 2001, WT/MIN(01)/DEC/W/2, dated 14th November, 2001 (hereinafter Declaration)
[3] (a) Concept Paper Relating to Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, Communication from the European countries and their member States, IP/C/W/339, dated 4 March 2002 (b) Paragraph 6 of the Doha Declaration of theatrics Agreement and Public Health, Communication from the European Communities and their member States, IP/C//352 dated 20 th June, 2002
[4] (a) Paragraph 6 of the Doha Declaration on the TRIPS Agreement and public Health, Communication from the United States, IP/C/W/
(b) Paragraph 6 of the Doha Declaration on the TRIPS Agreement and public health, Second Communication from the United States, IP/C/W/358 dated 9th July 2002[5] Paragraph 6 of the Ministerial Declaration on the TRIPS Agreement and Public health, IP/C/W/355 dated 25th June 2002, Communication from Brazil on behalf of the delegations of Bolivia, Brazil, Cuba, China, Dominican Republic, Ecuador, India, Indonesia, Pakistan, Peru, Sri Lanka, Thailand and Venezuela
[6] Proposal on Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public health, Joint Communication from the African Group in the WTO, IP/C/W/351 dated 24 th June 2002
[7] Paragraph 6 of the Doha Declaration of the TRIPS Agreement and Public health, Communication from the United Arab Emirates, IP/C/W/354, 24 th June 2002
[8] Frederick Abbott, WTO TRIPS Agreement and It’s Implications for Access to Medicines in Developing Countries, Study Paper 2a (Commission on Intellectual Property rights), p. 29 who argued that
“An authorization to make and export under certain conditions might unreasonably prejudice the interests of the patent holder. An authorization to supply a high-income market might under some circumstances might unreasonably prejudice the interests of the patent holder. An authorization regarding low-income market might unreasonably prejudice the interests of the patent holder if the exports were systematically diverted to high-income markets, thereby undermining the commercial return on the patent.
IN his later argument, Abbott (Frederick Abbott, The Doha Declaration on the TRIPS Agreement and Public Health: Lighting a Dark corner at the WTO, Journal of International Economic Law, 2002, pp. 469-505) re moved the agreement pertaining to Article 30 and export completely and argued as if only Article 31(f) of the TRIPS Agreement was relevant.
[9] Alan Sykes, TRIPS, Pharmaceuticals, Developing Countries, and the Doha “Solution”, 3 Chicago Journal of International Law, 1 (Spring 2002), also published as John M. Olin Law and Economics Working Paper No. 140 (2nd Series), The Law School, University of Chicago) where he denied the existence of Article 30 solution completely by asserting that “To my knowledge, developing nations have not suggested that they may rely on Article 30 to deal with the pharmaceutical issue” apart from, saying that the Doha Declaration does not have biding effect at all.
[10] Amir Attaran, Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: Options for TRIPS Council, Working Paper ,Center for International Development, Harvard University who essentially proposed the US Pharmaceutical Industries suggestion of exemption on the line of Section 271(e)(1) known as Bolar Exemption where he said “We propose that the Paragraph 6 mandate is more expeditiously satisfied by an agreement creating a rule of non-justifiability for the manufacture and export of generic versions of patented pharmaceuticals for developing countries lacking sufficient manufacturing capacity to meet their health needs.”(p. 7).
[11] Bildt, Carl, Fight Poverty, Not Patents, January 6, 2003, Wall Street Journal, http://online.wsj.com/article/0, ,SB1041804607865840304-search , 00.html
The article by Carl Bildt looks like one prepared by PhRMA particularly its observation that the Doha Declaration “reaffirmed the importance of intellectual property as necessary incentive for pharmaceutical investment and innovation.” This statement was repeatedly made by Gillespie White (Lee Gillespie White, What Did Doha Accomplish? – Doha Declaration on Intellectual Property Rights and Access to Medicines: What was really achieved?
http://mail.iipi.org/db/views/detail.asp?itemID=21.
Bildt also insisted that “the TRIPS Agreement does not explicitly provide for the compulsory licensing process to be used for the export of medicines, but only for their production.” He has just reiterated US position of simple waiver, which according to him brings in sufficient flexibility in the TRIPS Agreement.
[12] All the proposal to amend or delete Article 31(f) solution is based on the assumption that patenting monopoly extends to the export of the patented products. The USA in its Second Communication IP/C/W/358 dated 9th July, 2002 specifically mentioned
“This provision (Article 30 of the TRIPS Agreement) is intended to apply to statutory exceptions already provided for in many countries’ laws at the time the TRIPS Agreement was negotiated, situations such as non-commercial experimental use aboard vessels temporarily in the territory of a Member, and prior user rights. Interpreting Article 30 to allow members to amend their patent laws to permit compulsory licenses to grant to authorize their manufacturers to produce and export patented pharmaceutical products to other countries would both unreasonably prejudice the legitimate interests of the patent owner.” (para. 31)
[13] IP/C/W/355 dated 24 th June, 2002 from the developing countries in para 9 says “Such exceptions do not unreasonably conflict with the normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner. In the context of the proposed authoritative interpretation of Article 30, the limited exceptions address public health problems outside territory of the Member and therefore do not conflict with the normal exploitation of the patent. Moreover, the acts of making, selling and exporting patented products by third parties without the consent of the patent owner to countries with insufficient or no manufacturing capacities do not unreasonably detract from the returns ordinarily earned by the patent owner. It should also be noted that the act of exporting is not enumerated among the exclusive rights conferred by the patent in Article 28 of TRIPS. Consequently, they do not unreasonably prejudice the legitimate interests of the patent owner.
[14] Article 4bis [Patents: Independence of Patents Obtained for the same Invention in Different Countries]
(1) Patents applied for in the various countries of the Union by nationals of countries of the Union shall be independent of patents obtained for the same invention in other countries, whether members of the Union or not.(2) The foregoing provision is to understood in an unrestricted sense, in particular, in the sense that patents applied for during the period of priority are independent, both as regards the grounds for nullity and forfeiture, and as regards their normal duration.(3) The provision shall apply to all patents existing at the time when it comes into effect.(4) Similarly, it shall apply, in the case of the accession of new countries, to patents in existence on either side at the time of accession.(5) Patents obtained with the benefit of priority shall, in the various countries of the Union, have a duration equal to that which they would have, had they been applied for or granted without the benefit of priority.[15] Deepsouth Packing, 406 U.S. 518
[16] Standard Havens Products, Inc. v. Gencor Indus., Inc., 953 F.2d 1360 (Fed. Cir. 1991) (the Federal Circuit held that a defendant’s foreign sales of a machine which used a patented asphalt-making process did not implicate s. 271(f) p. 1374. In Aerogroup International Inc. v. Marlboro Footworks, Ltd., 955 F. Supp. 220 (S.D.N.Y. 1997), it was held that Aerogroup’s design patent for a shoe sole had no component parts to assemble, and would not be covered by s. 271(f), p. 231; Enpat Inc., et al v. Microsoft, 6 F. Supp. 2d 537, 47 U.S.P.Q.2D (BNA) 1218, (1998) observing that 35 U.S.C.S. 271(f) applies only to the assembly of patented products abroad, and does not apply to method patents, which have no components.
[17] Quality Tubing v. Precision Tube Holdings (75 F. Supp. 2d 613, p. 623
[18] Diamond v. Chakrabarty, 447 U.S. 303 (1980) in Opinion of Mr. Advocate General Jacobs delivered on 14th June, 2001, Kingdom of Netherlands v. European Parliament and Council of the European Union, [2002] All ER (EC) 97
[19] Abbott, supra note 8
[20] See Michael Halewood, Regulating Patent Holders: Local Working Requirements and Compulsory Licenses at International Law, 35 Osgoode Hall L. Journal, 243, pp. 251-52; Daya Shanker, Brazil, the Pharmaceutical Industry and the WTO, Journal of World Intellectual Property, Jan. 2002, Vol. 5, No. 1, pp.53-104 and India, the Pharmaceutical Industry and the Validity of TRIPS, Journal of World Intellectual Property, May, 2002, Vol. 5, No.3, pp. 315-372 Amir Attiran, Patent Rights and Local Working Under the WTO TRIPS Agreement: An Analysis of the US-Brazil Patent Dispute, 27 Yale Journal of International Law, Summer, 2002, pp. 365-392
[21] Article 5A(2) of the Paris Convention 1934 reads as “Nevertheless each of the countries of the Union shall have the right to take the necessary legislative measures to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example , failure to work.” The Paris Convention as modified by the Stockholm Conference says
Article 5(A)2 “Each country of the Union shall have the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example , failure to work.”Similarly Article 5(A)3 of the Paris Convention, 1934 version says “These measures shall not provide for the revocation of the patent unless the grant of compulsory licenses is insufficient to prevent such abuses.”
The 1967 version of such provision is
“Forfeiture of the patent shall not be provided for except in cases where the grant of compulsory licenses would not have been sufficient to prevent the said abuses. No proceedings for the forfeiture or revocation of a patent may be instituted before the expiration of two years from the grant of the first compulsory license. Article 5(A)(4) of the 1934 version of the Paris Convention says
“In any case, an application for the grant of a compulsory licence may not be made before the expiration of three years from the date of the issue of a the patent, and the license may only be granted if the patentee is unable to justify himself by legitimate reasons. No proceedings for the revocation of a patent may be instituted before the expiration of two years from the date of the granting of the first compulsory license.”The 1967 version of the Paris Convention says
“A Compulsory license may not be applied for on the ground of failure to work or insufficient working before the expiration of a period of four years from the date of filing of the patent application for three years from the date of grant of the patent, whichever period expires last; it shall be refused if the patentee justifies his inaction by legitimate reasons. Such a compulsory license shall be non-exclusive and shall not be transferable, even in the from o the grant of a sub-license, except with that part of the enterprise or goodwill which exploits such license.”The 1925 Convention reads Article 5(A) reads as
“In no case can the patent be mace liable to such measures before the expiration of at least three years from the date of grant of the patent and then only if the patentee is unable to justify himself by legitimate reasons.” Lord Cohen in his judgment elaborated this point by observing
“If the measures referred to in paragraphs (2) and (3) of the h1925 convention were measures to prevent the abuses of the kind referred to in section 37, it necessarily follows that paragraph (4) dealt only with the same measures, for the expression “such measures” can refer to and refer only to the measures mentioned in paragraph (2).
[22] Parke Davis, {1971] RPC 425, [1970] FSR 443
[23] Ibid.
[24] Ibid.
[25] Federal Supreme Court (BGH), 5 December, 1995, GRUR 1996, 190 – “Zwangslizenz”
[26] Michael Kern, CASRIP Newsletter (V312) (1996) Europe/Germany
[27] See Susan K. Sell, TRIPS and Access to Medicines: TRIPS and Access to Medicines Campaign, Proceedings of e h2002 Conference Access to Medic8ines in the Developing World: International Facilitation or Hindrance?, Wisconsin International Law Journal, Summer 2002, pp. 481-522. The article is based on part of her book “Private Power, Public Law: The Globalization of Intellectual Property Rights (forthcoming, 2003). The relevant para. says “TRIPS was a product of tireless and effective agency and economic coercion. TRIPS fundamentally altered the international intellectual property regime by dramatically extending property rights globally, and reduced policy-making autonomy in intellectual property. TRIPS confronted those who did not participate in the construction of this public international law as a constraint. Suddenly, practices that had been acceptable before, such as keeping medicines off patent became unlawful. The adoption of TRIPS gradually created a polarized political climate. On the one side are the architects and beneficiaries of TRIPS seeking to preserve and extend their gains and on the other are the victims of TRIPS seeking to minimize or reverse its damaging effects. Building upon their success the TRIPS architects worked hard to further extend property rights and ensure enforcement of TRIPS. They have embarked on an aggressive course to close any existing loopholes, to prosecute non-compliance, and to promote TRIPS-plus intellectual property standards outside the World Trade Organization in bilateral, regional, and multilateral agreements. Just as the IPC (the Intellectual Property Committee consisting of Bristol-Myers, Squibb, Digital Equipment Corporation, FMC, General Electric, Hewlett-Packard, IBM, Johnson and Johnson, Merck, Pfizer, Procter and Gamble, Rockwell International and Time Warner in 1994) pursued multiple channels to get TRIPS adopted, it has pursued a multilevel strategy in the wake of TRIPS to expand its agenda.” pp. 481-482
[28] The introduction of “import”, “offer to sell” and the period of patent to 20 years from 17 years was some of the provisions not at all present in the US Patent acts which were introduced by the US Uruguay Round Agreements Act, 1994, the Act by which the US approved the WTO Agreement.
[29] Similarly, Article 27.1 apparently introduced by Arthur Dunkel as per studies by Daya Shanker (‘The Vienna convention on the Law of Treaties, the Dispute Settlement System of the WTO and the Doha Declaration on the TRIPS Agreement, Journal of World Trade, vol. 36, no. 4, pp. 721-772) and Paul Champ and Amir Attiran, (Patent Rights and Local Working Under the TRIPS Agreement: An Analysis of the U.S.-Brazil Patent dispute, The Yale Journal of International Law, Summer, 2002, 365, 378) was used to remove local working provisions present in the UK Patent Act Section 48(3) on 29th July 1999 through The Patents and Trade Marks (World Trade Organization) Regulations 1999 is another example of more restrictive provisions in the TRIPS Agreement than were present in the domestic patent acts of the major promoters of the TRIPS Agreement.
[30] Deepsouth Packing v. Laitram, supra note 14, pp. 525-526
[31] Dowagiac Mfg. Co. v. Minnesota Moline Plow Co., 235 U.S. 641, 650 (1915), 649
[32] Deepsouth Packing v. Laitram 406 U.S. 518, p. 526
[33] Deepsouth Packing v. Laitram 406 U.S. 518, p 532
[34] Brown v. Duchesne (60 U.S. 183), p. 195
[35] Brown v. Duchesne (60 U.S. 183), pp. 195-196
[36] See Robert P. Merges, As Many as Six Impossible Patents Before Breakfast: Property Rights for Business Concepts and Patent System Reform, Berkeley Technology Law Journal, vol. 14, pp. 577-615, 1999
[37] John Hopkins University v. Cellpro (152 F.2d 1342), p. 76
[38] City of New York v. Roche Diagnostics, US Courts for the District of Massachusetts (150 F. Supp. 2d 191), p. 203
[39] Kirk A. Fausett, et al., v. Pansy Ellen, Inc. 1990 U.S. Dist. Lexis 19373; 19 U.S.P.Q.2D (BNA) 1228), p. 6
[40] Robotic Visions Systems, Inc. v. view Engineering , Inc. (1995 U.S. Dist. Lexis 21171; 39 U.S.P.Q. 2D (BNA) 1117), p. 6
[41] Sutton v. Gulf Smokeless Co., 77 F.2d 439 (4th Cir. 1935) p. 441
[42] Amstar Corp. v. Enviro tech Corp, 823 F.2d 1538, 1546 (Fed. Cir. 1987) (Fed. Cir. 1988)
[43] Enpat v. Microsoft, 6 F. Supp. 2d 537, pp. 539-540
[44] Aerogroup International v. Marlboro 955 F. Supp. 220, “First, the language of this section (s. 271(f)) by its terms does not apply to the patent at issue here, which ahs no “component parts” but is rather a design patent for a shoe sole. Second, Aerogroup nowhere alleges that any of the allegedly infringing waffle soles – or any component thereof – were supplied for m the United States. In fact, it is uncontested that the shoes at issue use in this case were manufactured entirely in China. Indeed, at least one court in this District has suggested that Section 271(f)(1) requires that the components be manufactured or assembled in the United States. See Windsurfing Int’l., Inc. v. Fred Ostermann GmbH, 668 F. Supp. 812, 820-21 (S.D.N.Y. 1987), aff’d, 1 F.3d 1214 (Fed. Cir. 1993). Finally, if this Court were to give such a broad interpretation to Section 271(f)(1), that would read out of existence Section 271(a)’s textual limitation to territorial reach, Section 271(f)(1) is a specific and targeted exception to the fact that the patent protection generally extends only within the United States. Accordingly, there is no subject matter jurisdiction as to t patent claims to the extent they encompass violations of the patent outside of the United States.” P. 232
[45] Chartex International PLC v. M.D. Personal Products, NO. 92-1556, 1993 U.S. App. LEXIS 20560, at 7, 9 (Fed. Cir. Aug. 12, 1993)
[46] Chartex, pp. 10-11
[47] Takenaka, Toshiko, Japanese Manufacturer’s Act of Inducing Infringement of US Patent is Allowed, CASRIP Newsletter, Autumn 2002, p. 20 [48] Smith Kline v. Microchemicals, Exchequer Court of Canada, 60 C.P.R. 193; 1969 LEXIS 205
[49] Microchem v. SmithKline & French [1972] S.C.R. 506, 519
[50] MicroChem v. SmithKline [1972] S.C.R. 506; 1971 S.C.R. LEXIS 75, p. 520
[51] Section 55.2(1) of the Canada Patent Acct – “- carry out experiments and tests required (proof of safety and bioequivalency) to obtain marketing approval of the copy of an innovative medicine before the expiration of the relevant patent in order to ensure market access immediately following the patent expiry (in particular Section 55.2(1) of t Patent Act) -manufacture an stockpile patented products for a period of up to six months before patent expiry (in particular section 55.2(2) of the Patent act in conjunction with the ‘Manufacturing and Storage of Patented Medicines Regulation’ as put by the EC in Canada-Patent Protection of Pharmaceutical Products, Request for the Establishment of a Panel by the European Commission, WT/DS114/5, dated 12 November 1998
[52] Daya Shanker, “Brazil , Pharmaceutical Industry and the WTO, Journal of World Intellectual Property, 2002, Vol. 5, No. 1, pp. 53-104 -‘India, the Pharmaceutical Industry and the Validity of TRIPS, Journal of World Intellectual Property, 2002, Vol. 5, No. 3, pp. 315-372 -The Vienna Convention on the Law of Treaties, The dispute Settlement System of the WTO and the Doha Declaration on the TRIPS Agreement, Journal of World Trade, Vol. 36, NO. 4, August 2002, pp. 721-772
[53] Brown v. Duchesne (60 U.S. 183)
[54] Brown v. Duchesne (60 U.S. 183), p. 195
[55] Brown v. Duchesne (60 U.S. 183) (p. 195).
[56] Deepsouth Packing v Laitram, p. 528
[57] Chesterfield v. United States, 141 Ct. Cl. 838, 159 F. Supp. 371 (Ct. Cl. 1958)
[58] Chesterfield v. United States, 141 Ct. Cl. 838, 159 F. Supp. 371 (Ct. Cl. 1958), p.
[59] Pitcairn v. United States, 212 Ct. Cl. 168; 547 F. 2d 1106
[61] Pitcairn v. United States, 212 Ct. Cl. 168, p. 199[62] Pitcairn v. United States, 212 Ct. Cl. 168, p. 200
[63] Chesterfield v. United States, 141 Ct. Cl. 838, 159 F. Supp. 371 (Ct. Cl. 1958), p. 840
[64] Ibid. p. 866
[65] Roche Products, p. 863
[66] Farnsworth, W. 2001: “’To Do a Great Right, Do a Little Wrong’: A User’s Guide to Judicial Lawlessness”, Working Paper Series, Public Law and Legal Theory Working Paper No. 01-18, School of Law, Boston University
[67] Bonsack Machine. Co. v. Underwood (73 F. 206), p. 211
[68] Kaz Manufacturing Co., Inc. v. Chesebrough-Pond’s Inc., 211 F. Supp. 815 (S.D.N.Y. 1962), affirmed 317 F.2d 679 (2d Circuit, 1963), p. 817-818
[69] Kaz Manufacturing Co., Inc. v. Chesebrough-Pond’s Inc., 211 F. Supp. 815 (S.D.N.Y. 1962), affirmed 317 F.2d 679 (2d Circuit, 1963), p. 818
[70] Sawin v. Guild, p. 555 [72] Ruth v. Stearns-Roger Mfg. Co. 13 F. Supp. 697, p. 712
[73] Kaz Manufacturing Co., Inc. v. Chesebrough-Pond’s Inc., 211 F. Supp. 815 (S.D.N.Y. 1962), affirmed 317 F.2d 679 (2nd Circuit, 1963), p. 818
[74] Kaz Manufacturing Co., Inc. v. Chesebrough-Pond’s Inc., 211 F. Supp. 815 (S.D.N.Y. 1962), affirmed 317 F.2d 679 (2d Circuit, 1963), p. 818-819[75] Beidler v. Photostat Corporation (10 F. Supp. 628), p. 630[76] Canada Patent protection of pharmaceutical products, WT/DS114/R dated 17th March, 2000
[77] Bullock Electric v. Westinghouse, 129 F. 105 (1904), Ketchum Harvester v. Johnson Harvester, 8 F. 586 (1881). Another judgement is in Packard Instrument v. Beckman Instrument, 346 F. Supp. 408
[78] Bullock Electric v. Westinghouse, 129 F. 105, p. 109
[79] Adriance, Platt v. McCormick Harvesting Mach. 55 F. 288 “It follows that the machines containing the inventions, which the defendants have made in this country, and have sold in England, France, and Germany, have been made in infringement of the rights of the complainant under the patents; and that, since the fact that the defendants propose to continue such manufacture and sale is admitted, the complainant is entitled to the temporary injunction prayed, and it is so ordered.” P. 292
[80] Packard Instrument v. Beckman Instrument, 346 F. Supp. 408, p. 411
[81] Canada-Patent Protection, note 404
[82] Canada-Patent Protection, para. 7.35
[83] Roche Products, p. 861
[84] Roche Products, Inc. v. Bolar Pharmaceutical Co. 733 F.2d 858 p. 862
[85] Byam v. Bullard, , 1 Curt. 100, 4F Cas. 934 (C.C.D. Mass. 1852 No. 2262)
[86] Steam Stone Cutter co. v. Sheldons, (21 F. 875, 1884, p. 877[87] Bonsack Mach. v. Underwood (73 F. 206, 1896)
[88] Sawin v. Guild, p. 4
[89] Pitcairn, pp. 199-200
[90] Roche Products, p. 863
[91] Group One, Ltd. v. Hallmark Cards Inc. 254 F. 3d 1041, 1047, 59 U.S.P. 2d 1121 (Fed. Cir. 2001), pp. 1047-1048
[92] Minnesota Mining and Manufacturing Company v. Chemque, Inc. 303 F. 3d 1294, 64 U.S.P.Q.2d(BNA)1270, p. 1308
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