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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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 Section 271(e)(1) of the US Patent Act as originally enacted, provided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.
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NOTES
[Continued from page 1]
[93] Intermedics, Inc. v. Ventritex (775 F. Supp. 1269, pp. 1273-1274
[94] Congress explicitly states: “The provisions of section 202 of the bill [i.e. the amendment of Title 35 adding section 271(e)] have the net effect of reversing the holding of the court in Roche.” H.R. Rep. No. 857, 98th Congress., 2d Sess., pt. 2 at 27, reprinted in 1984 Code Cong. & Admin. News 2647, 2711.
[95] Intermedics, Inc. v. Ventritex (775 F. Supp. 1269), p. 1276
[96] Intermedics, Inc. v. Ventritex (775 F. Supp. 1269), p. 1277
[97] Ibid, pp. 1277-78
[98] Eli Lilly v. Medtronic (915 F.2d 670, p. 673
[99] Intermedics Court further expanded its proposition by observing “Moreover, we are confident that congress understood that in the real world of high-tech medicine, at least, it is “business purposes” that inspire the kinds of infringing activities that the exemption clearly covers. Congress could not have intended the exemption to apply to only those whose purposes were purely scientific, or to those who were motivated simply by a driving curiosity. The common law already provided shelter for persons so motivated.” P. 1279
[100] The Court of Appeals observed that “Although section 156 and section 271(1e)(1) of title 35 passed Congress as sections 201 and 202 of the Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417 ss. 201, 202, 98 Stat. 1585, 1598-1603 (1984), this court declines to read possible limitations from one section into another.”
[101] Telectronics Pacing Sys., Inc. v. Ventritex Inc., 982 F. 2d 1520, 1524, 25 USPQ2D 1196, 1199 (Fed. Cir. 1992), p. 1525
[102] 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), p. 8
[103] 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). P. 8
[104] Telectronics Pacing Sys., Inc. v. Ventritex Inc., 982 F. 2d 1520, 1524, 25 USPQ2D 1196, 1199 (Fed. Cir. 1992), p. 1525
[105] Intermedics, p. 1273, The court in Intermedics quoted from the opinion of the United States Court of Appeals for the Federal Circuit in Roche Products that the experimental use exception was not broad enough to protect manufacturers of generic drugs while they were conducting the extensive field tests of their products that were necessary to generate the data that the FDA required before granting permission to market the drugs commercially. The emphasis was on commercialization of the patented product in the territory of the patent. In the legislative battle that ensued between generic drugs manufacturers and the main manufacturers, “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.”
[106] Intermedics, p. 1273[107] Intermedics, n. 2, p.1273
[108] Intermedics, n. 2, p.1275
[109] Amgen v. Hoechst Marion Roussel, 3 F. Supp. 2d 104, p. 108
[110] Amgen v. Hoechst Marion Roussel, 3 F. Supp. 2d 104, p. 108
[111] Amgen, p. 110
[112] Amgen court observed “The exemption is not so ephemeral that it will be lost as a result of conduct which postdates the making, using, or selling of the patented product. Telectronics, 982 F.2d at 1524. The retention of the GA-EPO following its manufacture is not an activity that could constitute infirmnent under Section 271(a). Cf. Id. At 1523-24.” P. 110
[113] Abtox, Inc. v. Exitron Corporation 122 F.3d 1019; 43 U.S.P.Q.2D (BNA) 1545)
[114] Abtox, Inc. v. Exitron Corporation 122 F.3d 1019; 43 U.S.P.Q.2D (BNA) 1545) p. 1029).
[115] See H.R. Rep. No. 98-857, 98th Cong., 2nd Session, reprinted in 1984 U.S. Code Cong. & Ad. News 2647, 2689-2692
[116] Infigen v. Advanced Cell Technology, 65 F. Supp. 2d 967, pp. 980-981
[117] Sawin v. Guild, 21 F. Cas. 554, p. 555
[118] In Eli Lilly v. Medtronic, the US supreme court observed that “The term patented invention in 271(e)(1) is defined to include all inventions , not drug-related inventions alone. See 35 U.S.C. s. 100(a) (when used in this tittle unless the context otherwise indicates … the term “invention” means invention or discovery.)” p. 665
[119] Bristol-Myers Squibb v. Rhone-Poulenc Rorer (2001 U.S. Dist. EEXIS 19361), p. 10
[120] Ibid. 11, “Section 271(e)(1) provides that it shall not be an act of infringement to make, use or sell a patented invention for use reasonably related to the development and submission of information under a federal law which regulates the approval of drugs. The section does not permit the commercial sale of a patented drug by the party using the drug to develop such information, but it does permit the commercial sale of research quantities of active ingredients to such party. The information which can be developed under this provision is the type which is required to obtain approval of the drug. A party which develops such information, but decides not to submit an application for approval, is protected as long as the development was done to determine whether or not an application for approval would be sought.” 1984 U.S.C.C.A.N. at 2678
[121] Michael Kern, Recent Federal Supreme Court decisions on Experimental Use and Compulsory Licensing, CASRIP Newsletter (V. 312) Europe/Germany
[122] Michael Kern, p.
[123] Michael Kern, p.
[124] Ono Pharmaceuticals Co., Ltd. v. Kyoto Pharmaceutical Industries, Ltd, Case No. 1998 (ju) 153 delivered on 16 April, 1999[125] Memorandum of December 15, 1993, for the US Trade Representative: Trade Agreements Resulting from the Uruguay Round of Multilateral Trade Negotiations, 58 Fed. Reg. 67, 236, 67, 289 (1993) (hereinafter memorandum of Dec. 15, 1993).Senate Report 104-394, 104th Cong. 2nd Sess. Accompanying Pharmaceutical Industry Special Equity Act of 1996 describes in detail the extraordinary effort of the USA to push for these provisions in the TRIPS Agreement when it stated “There is no question that disagreements over intellectual property rights deadlocked negotiations at times during the lengthy 7-year process. Our trade negotiators experienced ardent opposition from a number of developing countries, and even from certain developed countries in the European Community. This was an unacceptable piracy of U.S. creativity and innovation.” The accompanying note specifically mentioned Brazil and India two countries responsible for the extraordinary effort made by the USA to
[126] No. 00 C 0331, 2001 WL 969040 (N.D. Ill. Aug. 24, 2001
[127] Rotec Industries v. Mitsubishi International Corporation (215 F.3d 1251), p. 1251, “The statutory history of s. 271(a) may be divided into two distinct periods: before the GATT Uruguay Round Trade Related Aspects of Intellectual Property (“TRIPS) agreements, and after. Before the TRIPS Agreements, s. 271(a) granted patent holder the right to exclude others only from “,a making, using or selling the patented invention throughout the United States.” This court had construed this grant strictly, so that “neither intent nor preparation [to sell] constitute[d] infringement.” Laitram Corp. v. Cambridge Wire Cloth co., 919 F.2d 1579, 1583, 16 USPQ2d 1929, 1932 (Fed. Cir. 1990). In addition, a party could not be held liable for threatening infringement, contracting to make infringing devices, or even beginning construction of infringing devices. AS we noted in Eli Lilly & Co. v. Medtronic Inc., 915 F. 2d 670, 673, 16 USPQ2d 2020, 2023 (Fed. Cir. 1990), s. 271(a) did not cover acts other than an actual making , using or selling of the patented invention in its completed form. Moreover, the Supreme Court held in Deepsouth Packing Co. v. Laitram corp. , 406 U.S. 518, 527 (1972), that s. 271(a) excluded various activities prior to an actual sale. The court found that “sales rhetoric and related indicia such as price” could not infringe a patent unless the patentee proved the defendant was “selling patented invention.” Id.
[128]Rotec Industries v. Mitsubishi International Corporation (215 F.3d 1251), “In 1993, however, the United States completed negotiations on the TRUIPS Agreements. As a result of these negotiations, the United States agreed to amend its patent law to impose additional infringement liability for ”offer 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 invented states … infringes the patent.” Unfortunately, other than stating that an “offer to sell” includes only those offers “in which the sale will occur before the expiration of the term of the patent,” 35 U.S.C. s. 271(I) (Supp. 1997), Congress offered no other guidance as to the amending of the phrase. .. As mentioned above the amendment to s. 271(a) served to implement our nation’s commitment under the TRIPS Agreements. Accordingly we must recognize one of the agreement’s declared purposes: harmonizing worldwide patent law. See Lisa B. Martin & Susan L. Amster, Intellectual Property Protections 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 for sale.” Indeed, our first draft proposal during the TRIPS 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 at GATT Uruguay Round negotiations in Geneva May 14, 7 International 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 other signatory nations. ” (pp.1251-52)
[129] Quality Tubing v. Precision Tube Holdings (75 F. Supp. 2d 613), p. 623
[130] Rotec Industries v. Mitsubishi International Corporation (215 F.3d 1251), p. 1257-1258
[131] Quality Tubing v. Precision Tube Holdings (75 F. Supp. 2d 613, p. 623
[132] Quality Tubing v. Precision Tube Holdings (75 F. Supp. 2d 613, p. 623
[133] Quality Tubing. 624, n. 10
[134] Quality Tubing, p. 625
[135] Quality Tubing v. Precision Tube Holdings (75 F. Supp. 2d 613, p. 625
[136] Cybiotronics, p. 1171 quoting Quality Tubing , 75 F. Supp. 2d at 623-24[137] United Kingdom Patents Act 1977 s. 60 reads in part:
[A] person infringes a patent for an invention if, but only if, while the patent is in force, he does any of the following things in the United Kingdom in relation to the invention without consent of the proprietor of the patent, that is to say-(a) where the invention is a product, he makes , disposes of, offers to dispose of, uses or imports the product or keeps it whether for disposal or otherwise …
Section 60(1)(b) deals with inventions that are processes . It reads in part [W]here the invention is a process, he uses the process or he offers it for use in the United Kingdom when he knows, or it is obvious to a reasonable person in circumstances, that its use there without the consent of the proprietor would be an infringement on the patent …Section 60(2) reads in part
[A] person (other than the proprietor of the patent) also infringes a patent or an invention, if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances that those means are suitable or putting, and are intended to put, the invention into effect in the United Kingdom.
[138] John P. Sinnott, World Patent Law and Practice (2001)[139] 1995 WL 1082938 (United Kingdom Patents Court Mar. 20, 1995)
[140] Gretchen Ann Bender, Clash of the Titans: The Territoriality of Patent Law vs. The European Union, 40 IDEA, 49, 59 (2000). Article 29 of the convention deals with an infringement, stating in part: ”A Community patent shall confer on its proprietor the right to prevent all third parties not having his consent) from making, offering, putting on the market or using a product which is the subject –matter of the patent …” Community Patent convention 76/76/EEC, 1976 O.J. (L 17), art. 29[141] Gerber Garment Tech., 1995 WL 1082938, at 411
[142] 1982 WL 221922. (united Kingdom Patents Court Mar. 8, 1982)
[143] Rotec Indus., 215 F.3d at 1259 (Newmann J. concurring)
[144] 1982 WL 221922. (United Kingdom Patents Court Mar. 8, 1982) at 408-09
[145] Kalman v. PCL Packaging (U.K.) Ltd., 1982 F.S.R. 406 (at 1982 WL 221922) at 410[146] 1982 WL 221922. (United Kingdom Patents Court Mar. 8, 1982) At 418. Rotec Industries Inc., v. Mitsubishi Corp., 215 F.3d 1246, 1259 (Fed. Cir. 2000)(Newmann, J. concurring).
[147] Benton v. Latour,[147] Court of Appeal April 21, 1993, (LEXIS, UK Cases, Combined Courts).
[148] Sulkis, David,, (2001), Patent Infringement by Offer to Sell: Rotec Industries, Inc. v. Mitsubishi Corporation, Houston Law Review, 101-130, vol. 38,[149] Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 534 (1972) (quoting Laitram Corp. v. Deepsouth packing Co.., 4423 F.2d 936, 939 (5th Cir., 1971))
[150] Communication from the USA, supra note 4
[151] Abbott, supra note 8
[152] Bildt, supra note 11
[153] Judson Osterhoudt Berkey, The European Court of Justice and Direct Effect for the GATT: A Question Worth Revisiting, European Journal of International Law, 9 (1998), pp. 626-657, Gerard Conway, Breaches of EC Law and the International Responsibility of member States, European Journal of International law, Vol. 13, No. 3, pp. 679-695, Naboth van den Broek, Legal Persuasion, Political Realism, and legitimacy: The European Court’s Recent Treatment of the Effect of WTO Agreements in the EC Legal Order, Journal of International Economic Law (2001) pp. 411-440; Simon N. Lester, WTO Panel and the Appellate Body Interpretations of the WTO Agreement in US Law, Journal of World Trade, 35(3), pp. 521-543, 2001[154] US 301-910, para 4.472, p. 112
[155] United States-Sections 301-310 of the Trade Act of 1974, WT/DS152/R dated 22 Dec. 1999
[156] United States-Sections 301-310 of the Trade Act of 1974, WT/DS152/R dated 22 Dec. 1999
[157] Appellate Body Report on India – Patents (US), para 81
[158] 1988 ICJ REP. 12, 34, para. 57 (Advisory Opinion of 26 April, 1988). The Observer Mission of the Palestine Liberation Organization was created by GA Res. 3237, 29 UN GAOR Supp. (No. 31) at 4, UN Doc. A/9631, 1974. The closure of the mission was required by the Anti-terrorism Act of 1987, Title X of the Foreign Relationship Authorization Act, 1988 and 1989, Pub. L. No. 100-204, Title X, S. 1001, 101 Stat. 1331, 1406 (codified at 22 U.S.C. A. S. 5201-5203 (West Supp. 1988))
[159] Portuguese Republic v. Council, Case C-149/96 EC Reports 1999 p. I-08395, para 49
[160] Informal note by the Secretarial “Draft Agreement Establishing the Multilateral Trade Organizations” (No. 462 dated 12 March 1992), page 254
[161] Daily Report from the US Negotiator on MTO Issues, including Article XVI:4 (November, 1993) in US-301-310, n. 270, p. 109
[162] Pieter-Jan Kuyper, The New WTO Dispute Settlement System: the Impact on the Community, in the Uruguay Round Results, A European Lawyer’s perspective 87, 110 (Jacques H.J. Boourgeois, Frederique Berod & Eric Gippini Fournier eds. 1995 publishing the papers of a conference held in Bruges in October 1994.
[163] Appellate Body Report on India – Patents (US), para 79
[164] 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 -…(A) to limit any authority conferred under any law of the United States, including section 301 of the Trade Act of 1974 unless specifically provided of in this Act”.
[165]Draft Agreement on Trade Related Aspects of Intellectual Property Rights, received from the delegation of the European Communities, MTN.GNG/NG11/W/68 dated 29th March 1990[166] Rotoc Industries v. Mitsubishi, 215 3d 1246
[167] Rotoc Industries v. Mitsubishi, 215 3d 1246, pp. 1249-1250
[168] Rotoc Industries v. Mitsubishi, 215 3d 1246, p. 1251
[169] The Committee on the Judiciary Report accompanying S. 1277 (pharmaceutical Industry Special Equity Act of 1996), 104th Congress; 2nd Sess. Senate Report. 104-394 observing “The TRIPS Text was based on the "Dunkel Draft.” Draft Final Act embodying the Results of the Uruguay round of Multinational Trade negotiations, GATT Doc. MTN.TNC/W/FA (Dec. 20, 1991). This draft was proposed by Arthur Dunkel, the former Director General of the GATT, who resigned July 1, 1993.” Para 517
[170] Daya Shanker, Legitimacy and the TRIPS Agreement, Working Paper No. 1, Department of Economics, University of Wollongong, 2002, (forthcoming). Also available in SSRN Journals and IDEAS as Working Paper.
[171] 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 Wold Trade, Vol. 36, No. 4 August 2002, pp. 721-772
[172] Paul Champ and Amir Attaran, Patent Rights and Local Working Under the WTO RIPS Agreement: An Analysis of the U.S.-Brazil Patent Dispute, The Yale Journal of International Law, Summer, 2002, p. 365, p.378 saying “Negotiators came under pressure to conclude the TRIPSW Agreement by the end of 1991. With just over a month to go, Arthur Dunkel, the director general of the GATT and chairman of the Trade negotiating Committee, distributed a paper giving his overview of the negotiations and listing the challenges that remained ahead for negotiators. He noted that the “parties needed to determine the availability of patents without discrimination with regard to … whether the product is imported or locally produced.”
[173] “However, we must also note that the Committee has received a letter from the Vice President of the European Community, Sir Leon Brittan, who stated the bill “would contradict high and secure protection for the huge investments made by EC and US research-based pharmaceutical companies” and “send a negative and highly visible sign to those numerous countries which are still in the process of preparing new legislation on the protection of pharmaceutical inventions.” (104 Senate Report 394, 2nd Sess. accompanying ‘Pharmaceutical Industry Special Equity Act of 1996, Committee on the judiciary, October 1, 1996) [174] Second Communication from the USA, n. 4[175] United States – Sections 301-310 of the TRADE Acts of 1974 Report of the Panel WT/DS152/R dated 22 December 1999
[176] The WTO Panel Report in United States-Sections 301-310 of the Trade Act of 1974, WT/DS152/R dated 22 December 1999, n. 660
[177] P. Eeckhout, The Domestic Legal Status of the WTO Agreement: Interconnecting legal Systems, Common Market law Review, 1997, p. 11
[178] Judson O. Berkey, The European Court of Justice and Direct Effect for the GATT: A queen Worth Revisiting, European Journal of International Law 9 (1998), pp. 626-657
[179] Ernst-Ulrich Petersmann “The EEC as a GATT Member – Legal Conflicts between GATT Law and European Community Law’, in M. Hilf, F. G. Jacobs and E.-U. Petersmann (eds), The European Community and GATT (1986), ‘Strengthening the GATT Dispute Settlement System: On the Use of Arbitration in GATT’ in M. Hilf and E.-U. Petersmann (eds) The New GATT Round of Multilateral Trade Negotiations (1991) ; ‘National constitutions and International Economic Law (1993) in M. Hilf and E.-U. Petersmann (eds) National Constitutions and International Economic Law.
[180] M. Hilf, The Application of GATT within the member States of the European Community, with Special Reference to the Federal Republic of Germany, in Hilf, Jacobs and E.U. Petersmann, supraLee and Kennedy “The Potential Direct Effect of GATT 1994 in European Community Law, 30 Journal of World Trade (1996) 67 not approving giving direct effect to GATT 1994.
[181] Kuilwijk, K. J., The European Court of Justice and the GATT dilemma, (1996)
[182] Gerard Conway (2002), Breaches of EC Law and the International Responsibility of Member States, EJIL, Vol. 13, No. 3, pp. 679-695
[183] Berkey, supra note 138, note 3, where Berkey further observed “See case 181/73, R&V. Haegeman v. Belgian State[1974] ECR 449, and Joined Cases 21-24/72, International Fruit Company NV and others. Produktschap voor Groenten en Fruit, [1972] ECR 1219. The ECJ also held that international agreements are supreme over all Secondary Community law. See Case 104/81, Hauptzollamt Mainz v. C.A. Kupferberg & Cle. Kga. A., [1982] ECR 3641, and International Fruit Company. Finally the ECJ held that similarly worded provisions contained in both the EC treaties (the European Community (EC) Treaty and the Treaty on European Union (Maastricht Treaty) will hereinafter be referred to collectively as the “Treaty”) and international agreements do not have to be interpreted in the same manner. SEE Case 270/80, Polydor Limited and RSO Records Inc. v. Harlequin Record Shops Limited and Simons Records Limited, [1982] ECR 329, and Case 70/87, EEC Seed Crushers’ and Oil Processors’ Federation (FEDIOL III) v. EC Commission, [1989] ECR 1781”
[184] ECJ Joined Cases 21-24/72, International Fruit company v. Produktschap voor Groents en Fruit (1972) ECR 1219;, ECJ Case 9/73, Schluter, (1973) ECR 1135, ECJ case C-280/93, Federal Republic of Germany v. Council, (1994) ECR I-4737 International Fruit Company, at 1227
[185] Case-280/93, Federal Republic of Germany v. Council of the European Communities, [1994] I ECR 4973 at 5073
[186] FEDIOL III, supra note - at 1831; Case 69/89, Nakajima All Precision Co. Ltd. v. Council of the European Communities, [1991] I ECR 2069
[187] Nakajima All Precision Co. Ltd. v. Council of the European Communities, [1991] I ECR 2069 at 2178
[188] Lee and Kennedy, supra note, at 81
[189] Sanger ‘U.S. Won’t Offer Trade Testimony on Cuban Embargo’, NY Times, 21 February, 1997, Section A, at 1.[190] The US implementing legislation, 19 U.S.C. s. 102© says“No person other than the United States (A) shall have any cause of action or defense under any of the Uruguay Round Agreements or by virtue of congressional approval of such an agreement, or (B) may challenge, in any action brought under any provision of law any action or inaction by any department, agency, or other instrumentality of the United States, any State or any political subdivision of a State on the ground that such action or inaction is inconsistent with such agreement.”
[191] J. H. Jackson, W. J. Davey and A.O. Sykes, Jr., Legal Problems of International Economic Relations (3rd Edition, 1995), at 224-226
[192] Kuilwijk, The European Court of Justice and the GATT Dilemma (1996).
[193] Judith H. Bello argued that the GATT94 like GATT 1947 was nothing but a balance of rights and obligations of benefits and burdens, “achieved among members through negotiations .. [so that] a government could renege on its negotiated commitment not to exceed a specified tariff on an item, provided it restored the overall balance of GATT concession through compensatory reductions in tariffs on other items.” “The WTO Dispute Settlement Understanding: Less is More, 90 AJIL (1996) 416, at 417
[194] Jackson, ‘Editorial Comment: The WTO Dispute Settlement Understanding-Misunderstandings on the Nature of Legal obligations’, 91 AJIL (1997) 60 at p. 61,62
[195] COM(94) 414 final endorsed by the Council – Council Decision 94 (800) EC, OJ 1994 L336 (22 December 1994)
[196] Case 181/73, Haegmean v. Belgium [1974] ECR 449, at 459-460; Case C-416/96, Eddline El-Yassini v. Secretary of State for the Home Department [1999] ECR I-1209; Case 262/96, Surul v. Bundesanstalt fur Arbeit [1999] ECR I-2685. See generally Stein, ‘External relations of the EC: structure and process’, I-1 Collected courses of the Academy of European Law (`1990) 115, at 164-175.
[197] McGoldrick, ‘EU Law and International Law: The Interface for the New Millennium’, in I. Cameron and A. Simoni (eds), Dealing with Integration, vol. 2 (1998) 133
[198] International Fruit Company NV and others v. Produktschap voor Groenten en Fruit, [1972] ECR 1219
[199] Case 69/89, Nakajima All Precision Co. Ltd. v. Council of the European Communities, [1991] 1 ECR 2069, at 2178.
[200] Gerard Conway, supra note, n. 14 “Generally among the rules of general public international law that the ECJ (or the Court of First Instance) has applied, or accepted the status of, are law making international treaties to which it is not a party, including rules concerning treaty interpretation (e.g. Hauptzollamt Mainz v. CA Kupferberg & Cie KG [1982] ECR I-3641; and Case T-115/94, Opel Austria v. Council [1997] ECR II-39 concerning t 1969 Vienna Convention on the Law of Treaties, 8 ILM (1969) 683; rules of nationality (e.g. Case 41/74, Van Duyn v. Home Office [1974] ECR 1337; rules concerning the Law of the Sea (e.g. Case C-286/90, Anklagemyndhigeden v. Poulsen Diva navigation Corp. [1992]ECR I-601; rules concerning treaty suspension (e.g. Case C-162/96, Racke v. Hauptzollamt Mainz [1998] ECR I-3655); and rules concerning the allocation of extraterritorial jurisdiction (e.g. Case T-102/96, Gencor v. Commission [1999] ECR II-753)”
[201] Naboth van den Broek, Legal Persuasion, Political Realism, and Legitimacy: The European Court’s Recent Treatment of the Effect of WTO Agreements in the EC Legal Order, Journal of International Economic Law (2001), pp. 411-440
[202] Portuguese Republic v. Council, Case C-149/96 EC Reports 1999 p. I-08395
[203] Parfums Christian Dior v. TUK Consultancey, Joined Cases C-300/98 and C-392/98
[204] Schieving-Nijstad v. Robert Groenveld, Case C-89/99, ECR 2001 I-05851
[205] Portuguese Republic v. Council, Case C-149/96 EC Reports 1999 p. I-08395, para 35
[206] Ibid., paras. 40 and 46
[207] Ibid, para 47
[208] Council Decision 94/800 (1994) OJ L 336
[209] Portuguese Republic v. Council, Case C-149/96 EC Reports 1999 p. I-08395, para 48[210] Dior v. Tuk, para 43.
[211] Dior v. Tuk, para 49 says “”…in a field to which TRIPS applies and in respect of which the Community has already legislated, the judicial authorities of the member States are required by virtue of Community law when called upon to apply national rules with a view to ordering provisional measures for the protection of rights falling within such a field, to do so as far as possible in the light of the wording and purpose of Article 50 of TRIPS, but in a field in respect of which the Community has not yet legislated and which consequently falls within the competence of the Member states, the protection of intellectual property rights, and measures adopted for that purpose by the judicial authorities do not fall within the scope of Community law. Accordingly, Community law neither requires nor forbids that the legal order of a member States should accord to individuals right to rely directly on the rule laid down by Article 50(6) of TRIPS or that it should oblige the courts to apply that rule of their own motion.” Para. 49
[212] Schieving-Nijstad v. Robert Groenveld, para 52: It subsequently observed that “The answer to the first question must therefore be that the procedural requirements of Article 50(6), are not such as to create rights upon which individuals may rely directly before the Community courts and the courts of the Member States. Nevertheless, where the judicial authorities are called upon to apply national rules with a view to ordering provisional measures for the protection of intellectual property rights falling within a field to which TRIPS applies and in respect of which the Community has already legislated, they are required to do so as far as possible in the light of the wording and purpose of Article 50(6) of TRIPS, taking account , more particularly, of all the circumstances of the case before them, so as to ensure that a balance is struck between the competing rights and obligations of the right holder and of the defendant.” (para 55)
[213] In Hauptzollamt these the question of preciseness and definitiveness was answered by the ECJ by stating
a. para 20. “The mere fact that the Contracting parties have established a special institutional Framework for Consultations and negotiation inter se in relation to the implementation of agreement is not in itself sufficient to exclude all judicial application of that agreement. The fact that a court of one of the parties applies to a specific case before it a provision of the agreement involving an unconditional and precise obligation and therefore not requiring any prior intervention on part of the joint committee does not adversely affect the powers that the agreement confers on the committee.
b. Para 21. As regards the safeguard clauses, which enable the parties to derogate from certain provisions, and as a general rule after consideration within the joint committee in the presence of both parties. Apart for specific situations, which may involve their application, the existence of such clauses, which moreover, do not affect the provisions prohibiting tax discrimination, is not sufficient in itself to affect the direct applicability which may attach to certain stipulations in the Agreement.
[214] Broek,
[215] Bresciani Case 87/75; Convention de Yaounde, l’Association des Pays the Territoires d’Outre-Mer a la CEE, du 20 Juillet 1963; The Convention de Yaounde II, of 29 July 1969 has practically stayed the same
[216] ECJ Case C-18/90, Onem v. Kziber (1991); Cooperation Agreement Between the European Economic Community and the Kingdom of Morocco of 17 April 1976, OJ No. L264, p. 2 of 27 September 1978[217] Broek, p. 434
[218] Broek, p. 434
[219] Broek, p. p. 438
[220] Article IX.4(a) of the Agreement on Government Procurement, Article 19.5(a) of the Agreement on Import Licensing Procedures, Article 9.4.1 of the Agreement on Trade a in civil Aircraft, and article 16.6 of the Agreement on Implementation of Article VI during the Tokyo Round Agreements. Their presence in the final agreements as Article XXIV.5(a) , Article 32.5 of the Agreement on Subsidies and Countervailing Measures, Article 8.2(a) of the Agreement on Import Licensing Procedures, Article 9.4.1 of Agreement on Civil Aircraft, and Article 18.4 of the Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade 1994.[221] Oppenheim’s International Law, 9th Edition at 82-83 (footnote omitted, “From the standpoint of international law states are generally free ass to the manner in which domestically , they put themselves in the position to meet their intentional obligations; the choice between the direct reception and application of international law, or its transformation into national law by way of statute, is a matter of indifference, s the choice between the various forms of legislation, common law or administrative actin as the means for giving effect to international obligations. These are matters for each state to determine for itself according to its own constitutions practices”
[222] US Sections 301-310 para: 4.422, p. 102, Section 301 Panel Report, paragraphs 7.96, 7.109, 7. 125, 7.136. The members of the Panel were David Hawes, Terje Johannessen, and Joseph Weiler)
[223] US Sections 301-310, p. para 4.440, p. 105
[224] US Sections 301-310, para 4.450
[225] J. H. Jackson, 1967, The General Agreement on Tariffs and Trade in United States domestic Law, 66 Mich. L. Rev. 250 (1967); John H. Jackson, Status of Treaties in domestic legal Systems: A Policy Analysis “ … a court would find great difficulty in directly applying the GATT, with its many elaborate constraints on national actions in international trade, in circumstances where those GATT norms would also have a higher status than even later-in time legislation or other act. In 86 Am. Journal o Int. Law, 310, 333-334 (1992) at 334. The article says something opposite that the foreign court decisions did not address the effect of GATT Panel Rep[orts in domestic law, but the effect of GATT itself.
[226] US Sections 301-310, para 7.113
[227] Rotec v. Mitsubishi, supra note
[228] Hyundai, Electronics, note 7 p. 21
[229] WTO dispute Panel Report: United States – Anti-Dumping duty on DRAMS of one Megabit or Above from Korea, 1999 WTO Jan, 1999, adopted mach 19, 1999. Hereinafter Korean DRAMS WTO Report
[230] Agreement on Implementation of Article VI of the 1994 General Agreement on Tariffs and Trade (the “Antidumping Agreement”)
[231] WTO dispute Panel Report: United States – Anti-Dumping duty on DRAMS of one Megabit or Above from Korea, 1999 WTO Jan, 1999, adopted mach 19, 1999. Hereinafter Korean DRAMS WTO Report, 1999 WL 38403, at 141
[232] Hyundai, “Most importantly, Congress made this clear when it codified the principles espoused in Footwear Distributors as part of the URAA. Specifically, Congress provided that the response to an adverse WTO panel report is the province of the executive branch and , more particularly, the office of the U.S. Trade Representative. See URAA s. 129 (codified as 19 U.S.C. s. 3538). Thus, the WTO panel report does not constitute binding precedential authority for the court.”
[233] Hyundai, 53 F. Supp. 2d 1334
[234] Letter of Velta A. Melnbrencis, Esq., first page (Jan, 26, 1994) in Footwear, p. 1088[235] Debartolo Corp. v. Fla. Gulf Coast Bldg. & Const. Trades Council, 485 U.S., 574-75 (1988), “…Statutory interpretation [by a agency] would normally be entitled to deference unless that construction were clearly contrary to the intent of Congress … Another rule of statutory construction, however, is pertinent here: where an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress. [NLRB v.] Catholic Bishop [of Chicago, 440 U.S. 490,] 499=501, 504 [1979]. This cardinal principle has is roots in Chief Justice Marshall’s opinion for the Court in Murray v. The Charming Betsy, 2 Cranch 64, 118 (1804) , and has for so long been applied by this Court that it is beyond debate.”
[236] Restatement (Third) of the Foreign Relations Law of the United States, Vol. 2, p. 264
[237] Footwear, p. 1093
[238] Footwear, p. 1093
[239] Footwear, p. 1095
[240] Footwear, p. 1096
[241] Panel Report United States-Antidumping Duty on Dynamic Random Access memory Semiconductors (DRAMS) of One Megabit or Above from Korea, WT/DS99/R, adopted 19th March 1999.
[242] Simon N. Lester, WTO Panel and the Appellate Body Interpretations of the WTO Agreement in US Law, Journal of World Trade 35(3): 521-543, 2001, Kluwer Law International p. 538
[243] The American Law Institute, Restatement (Third) of the Law, Foreign Relations Law of the United States, Section 325, note 4. See also, John H. Jackson, “The Effect of Treaties in United States Domestic Law”., in Francis G. Jacobs and Shelley Roberts (eds) The Effect of Treaties in Domestic Law (Sweet & Maxwell, 1987), p. 166
[244] Simon N. Lester, WTO Panel and the Appellate Body Interpretations of the WTO Agreement in US Law, Journal of World Trade 35(3): 521-543, 2001, Kluwer Law International p. 540
[245] There has been two interesting judgments recently regarding the interpretations of the WTO Agreements by WTO dispute Settlement Panels and the Appellate Body would constitute part of US international obligations. In Warren v. EPA, the D.C. Circuit derived support from United States – Standards for Reformulated and Conventional Gasoline[245] holding that its decision was “bolstered by the WTO decision lurking in the background”. The Sixth Circuit Court of Appeals has been more forthcoming in Wheeling-Pittsburgh v. Mitsui, 25th July 2000, No. 99-3741 where the Sixth Circuit noted that “while GATT does not trump domestic legislation’, Congress has an ‘interest in complying with US responsibilities under the GATT”.
[246] John H. Jackson, The WTO Dispute Settlement Understanding-Misunderstandings on the Nature of legal Obligations, 91 Am. Journal of International Law, 60 (1997)[247] Berkey, 1998
[248] Lester, p. 541
[249] Ministerial Declaration on the TRIPS Agreement and Public Health, WTO/IP/C/W/312, WT/GC/W/450 dated 4th October, 2001, supra note 1
[250] Portuguese Republic v. Council, Case C-149/96 EC Reports 1999 p. I-08395, para 41
[251] Portuguese Republic v. Council, Case C-149/96 EC Reports 1999 p. I-08395, para 49
[252] Footwear, p. 1093
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