RECENT DEVELOPMENTS IN THE FIELD OF PHARMACEUTICAL PATENTS: IMPLEMENTATION OF THE TRIPs AGREEMENT

By Carlos M. Correa

Universidad de Buenos Aires

December 1998

Introduction

A large proportion of patents annually granted in the world relates to pharmaceutical products and processes. Litigation relating to those patents is also abundant, particularly in relation to biotechnology-based pharmaceuticals.

The adoption of the TRIPS Agreement in 1994 has represented a historical change in intellectual property, with profound implications in the area of pharmaceutical patents. It seems relevant, therefore, to consider the developments that have occurred in that field since the entry into force of that Agreement, in January 1995.

Some interesting legislative developments have taken place in the field of pharmaceutical patents in industrialized countries, as a result of the adoption of the TRIPS Agreement. For instance, the application of article 33 of the Agreement permitted the extension of the duration of a number of pharmaceutical patents granted in United States. Another impact of the Agreement (even before its formal adoption) was the elimination of the automatic compulsory licensing system for medicines in Canada.

Without prejudice to the significance of these developments, it seems clear that it is in developing countries where the patenting of pharmaceuticals has undergone dramatic changes. At the inception of the Uruguay Round, about 50 countries did not confer protection for pharmaceutical products. The TRIPS Agreement obliged all WTO Member countries to recognize such protection.

The TRIPS Agreement is not a uniform law (Unctad, 1996). It only sets forth minimum standards to be provided for. Any WTO Member may grant a broader protection than that required under the Agreement, but it can not be obliged to do so (article 1). Article 7 of the Agreement ("Objectives"), establishes a general framework for the interpretation of its provisions. It aims at balancing the interests of innovators and users of technology in the protection of intellectual property, in a manner that enhances "social and economic welfare". The practical achievement of this balance is not, however, an easy task.

The Agreement leaves considerable room in certain areas to legislate at the national level (Correa, 1998) and, in particular, to adopt measures that may mitigate eventual negative effects of the introduction of pharmaceutical product patents (Challu, 1991; Nogues, 1993; Subramanian, 1995). Article 8.1, in particular, provides that "Members may, in formulating or amending their national laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement".

This paper considers a number of issues that have arisen in countries which have recently introduced pharmaceutical product patents or that are applying the transitional periods allowed by the TRIPs Agreement. It considers, in particular, the case of Latin American countries.

Exclusions from patentability

The TRIPS Agreement does not define what an invention is; therefore, WTO Members may exclude from patentability substances which exist in nature, such as pharmaceutical products that consist of human proteins (e.g. interferon, eritropoietin).

The Agreement specifically permits to exclude from patentability "diagnostic, therapeutical and surgical methods for the treatment of humans" (article 27.3.a).

In addition, article 27.2 states that "Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by domestic law".

Many developing countries (Argentina, Brazil, Mexico, Andean Group countries) have made use of some or all of these provisions in implementing the TRIPs Agreement, thereby restricting the scope of patentability in a manner consistent with the TRIPs Agreement.

 

Patents on formulations and therapeutical uses

Pharmaceutical patents only exceptionally correspond to new chemical entities. The majority of patents granted in this field protect processes, uses of substances and formulations. Only 433 new chemical entities entered the world market between 1983 and 1992; nevertheless, the number of patents granted in the pharmaceutical field was many times more (Zaveri, 1998, p. 71). The registration of patents on formulations and/or on therapeutical uses, close to or after the expiration of the original patent on an active ingredient, allows to extend -at least to some extent- monopoly rights well beyond the expiration of the original patent, thus giving rise to the so-called "ever-greening" of pharmaceutical patents (Rhein, 1998, p. 37).

Some developing countries that had not recognized so far pharmaceutical product patents, have been reportedly flooded in the last four years by thousands of applications claiming protection for trivial or generically defined processes, second uses of known products and formulation of products already in the market. If granted, these patents may block the commercialization of products that would otherwise be in the public domain.

Of course, many of these applications should be rejected if the patentability requirements were properly applied. The difficulty is that most patent offices in developing countries lack the capabilities for a serious examination of applications. In addition, in many cases, the laws are not clear enough with respect to the patentability of certain alleged inventions.

Developing countries that shift from a situation of non-patentability of medicines to the recognition of product patents thereon, should consider the room of maneuvre that the TRIPs Agreement leaves to deal with different modalities of inventions in that field. The transition to a full regime of patentability may be made in a progressive manner by carefully defining the scope of protection to be granted.

One important aspect in this regard relates to the protection of uses of known products. The TRIPS Agreement does not oblige such uses, but only product and processes (articles 27.1 and 28).

Very often patents in the pharmaceutical field relate to the utilization of a known product. The Munich Convention contains a specific rule (article 54.5) recognizing the patentability of such an utilization if not comprised in the state of the art. No similar provision is contained in the TRIPS Agreement. An invention relating to the use of a product lacks industrial applicability; it may also be deemed as non-patentable under the exclusion from patentability (allowed by the Agreement and most national laws) of therapeutical methods.

A clear rule excluding the patentability of uses of an existing substance may permit to address the problem of "biopiracy", i.e. those cases in which a substance found in nature (generally in a developing country) is patented on the basis of the discovery of certain therapeutical use.

Applications relating to the "second use" of a known pharmaceutical product are also frequent. This type of applications can only be accepted on the basis of a legal fiction. They were admitted by the European Patent Office only in 1984 (Decision "Amtsblatt EPA" of 5-12-84) when framed under the "Swiss formula". However, an invention consisting of the second use of a substance is not more than a set of instructions to physicians that, as such, do not meet the patentability requirements. The TRIPs Agreement does not oblige to confer protection to such uses.

The use of known products and, in particular, the "second use" of a pharmaceutical product are not deemed patentable in many Latin American countries, such as Argentina and the Andean Group countries.

Scope of claims

Product patent claims are, in general, drafted in structural terms, that is, in a manner in which the claimed compound is described according to its chemical composition. In some jurisdictions, functional claims (which describe what an invention does rather than what it is) and "product by process" claims (whereunder the product is described through the process used for its production) are admitted. In some cases claims that cover a range or series of variable alternative elements, are also accepted.

These types of claims generally lead to a scope of protection broader than that allowed under a structurally, precisely, defined claim. Under the TRIPS Agreement, Member countries are free to accept or not such modalities of claim drafting.

Exceptions to exclusive rights

Under article 30 of the TRIPs Agreement, there is considerable freedom for national legislation to define exceptions to the patentee's exclusive rights. Based on comparative law and on other proposals, the following exceptions may be provided for within the scope of article 30:

* acts done privately or for a non-commercial purpose;

* use of the invention for teaching;

* preparation of medicines for individual prescriptions;

* prior use (use of the invention by a third party who started -or undertook serious preparatory acts- before the date of application for the patent or of its publication);

* experiments made for the purposes of seeking regulatory approval during the lifetime of a patent, in order to market a product immediately after the expiration of a patent ("early working exception ");

* use of the invention for research and experimentation, including for commercial purposes;

* "parallel imports" of a protected product, on the basis of the principle of "international exhaustion" (article 6 of the

Agreement).

The two latter and the "early working" exceptions are of particular importance in the pharmaceutical field.

Experimental use

An important question is whether an invention may be used by a third party, without the authorization of the patent holder, for commercial experimental purposes, for instance, to eventually request a voluntary license (or challange the validity of the patent), or to improve on the invention.

The use of an invention for such purposes has been generally admitted by case law in Europe, on the basis of article 27(b) of the Community Patent Convention (Cornish, 1998, p. 735). In United States, instead, the interpretation of the "research exception" has been more restrictive. Only scientific research seems to be admitted.

Few developing countries seem to have explicitly dealt with this issue. Many laws provide for an exception in cases of scientific research and teaching, but leave undefined the cases of experimentation with commercial aims.

Experimentation on a patented invention is clearly admissible under the TRIPS Agreement, as an exception to exclusive rights (article 30).

Acts for experimental purposes are specifically considered an exception to the exclusive rights in some Latin American countries, only if such acts are done for non-profit. According to the Mexican law (Industrial Property Law, 1991 as amended in 1994, article 22.I) an exception applies in respect of a person who

"in the private or academic sphere and for non-commercial purposes, engages in scientific or technological research activities for purely experimental, testing or teaching purposes, and to that end manufactures or uses a product or process identical to the one patented"

Similarly, article 34.c) of Decision 344 the Andean Group (Bolivia, Colombia, Ecuador, Peru, and Venezuela) establishes that there is no infringement

"where the use is made at an experimental, academic or scientific level and for non-profit-making purposes"

The law of Trinidad and Tobago include an "experimental purposes" exception, without limiting it, however, to non-profit acts (Act No. 21 of 1996, article 42.b).

In Panama, the exception is provided for both scientific research and experimental purposes. According to Law No. 35, 1996, article 19.2) it does not infringe a patent

" an industry or enterpise...that engages in acts of manufacture or use of the invention for experimental purposes relating to the subject matter there or for purposes of scientific or education research"

Article 42 of the Brazilian patent law (1996) states that a patent confers the right to prevent a third party from producing, using, offering for sale, sell or import with those purposes. Among the admissible exceptions, the law lists those "acts practiced by non-authorized third parties, with an experimental purpose, related to scientific or technological studies or research".

In the case of Argentina, the patent law (Law 24.481, 1995, article 36.a) established a narrow exception for research activities. It only exempted a person that

"without gainful intent, conducts scientific or technological activities for purely experimental, testing or teaching purposes and to that end manufactures or uses" (the invention).

Subsequently, an experimental exception was introduced by law 24.766 of December 1996, which allows for the use of a patent with experimental aims.

In sum, the Latin American legislation does not seem to have fully used so far the room left by the TRIPS Agreement in order to providing for a comprehensive experimental exception, as permitted by the TRIPS Agreement and allowed in European and other developed countries.

The "early working" exception

The U.S. Drug Price Competition and Patent Term Restoration Act introduced, in 1984, the possibility of using a patented invention before the date of expiration of the patent in order to apply for registration of a generic product, to be commercialized after that date. In exchange for this permission, the term of a patent could be extended up to five years in order to compensate for the delay in the commercialization of a product caused by the approval procedures.

Canada adopted a similar "Bolar" provision, but also allowing the third party to produce and stockpile the product for realease immediately after the expiration of the patent. This exception was not linked to an extension of the patent term. However, the regulatory review of a product was linked to the patent status: the generics producer must give notice to the patent holder and the latter is given an automatic injunction. According to the Patented Medicines (notice of Compliance) Regulations the approval of a generic version may be delayed for 24 months when there is a patent dispute.

Argentina explicitly adopted the "Bolar" exception" under law 24.766 of 1996, allowing for experimentation on and application for approval of a generic product before the expiration of the respective patent (article 8). This exception is not linked to the extension of the patent term.

Israel introduced in 1998 a legislative reform -modeled on the basis of the U.S law- allowing third parties to experiment before the expiration of a patent for obtaining registration for marketing in Israel or in a foreign country with a similar exception. The law permits the extension of the life of the patent for up to five years (or for 14 years from first registration worldwide or upon expiration of an extension granted elsewhere, whichever terminates earliest). A similar exception was introduced by Australia.

In the European countries, an "early working" exception has been gradually admitted by case law on the basis of the already mentioned right by a third party to conduct experimentation without the authorization of the patent owner (Cook, 1997; NERA, 1998).

 

Parallel imports

Another important issue relates to the application of the principle of exhaustion of rights as a basis for admitting parallel imports of legitimate products. This is a particularly controversial issue in the pharmaceutical sector. The right of any WTO Member to allow parallel imports seems incontestable under article 6 of the TRIPS Agreement Correa and Yusuf, 1998).

The doctrine of exhaustion of patents on an international scale has gained growing recognition. For instance, it has been applied in two cases by Japanese courts. The High Court of Tokyo held in "Jap Auto Products Kabushiki Kaisha & Anor v. BBS Kraftfahrzeug Technik A.G (1994) that the parallel imports of auto parts purchased in Germany did not violate patents granted to BBS in Japan. In the "Aluminium Wheels" case, the Japanese Supreme Court affirmed, in July 1997, that article 4bis of the Paris Convention ("Independence of patents for the same invention in different countries") did not control in Japan and that the issue of parallel imports was a matter of national policy of each country.

The international exhaustion of IPRs has also been admitted in other countries al least in respect of trademarks and copyrights. This has been the case, for instance, of Australia, New Zealand (in respect of copyrights) and the United States. In this latter country, a decision by the Supreme Court of March 9, 1998, affirmed the exhaustion of rights doctrine with regard to the importation of copyrighted items sold in the "gray market" (Quality King Distributors Inc. v. L'Anza Research International Inc.)

An international exhaustion principle has been adopted by the Andean Group countries in their "Common Regime on Industrial Property", as contained in Decision 344 of 1993. Article 34 d) of said Decision states that the patent owner can not exercise his exclusive rights in the case of

"importation of the patented product that has been marketed in any country with the consent of the owner, a licensee or any other authorized person".

Similarly, the Argentine patent law No. 24.481 of 1995, provides that the rights conferred by a patent shall have no effect against

"any person who...imports or in any way deals in the product patented or obtained by the patented process once the said product has been lawfully placed on the market in any country; placing on the market shall be considered lawful if it conforms to Section 4 of Part III of the TRIPs Agreement" (article 36.c).

The South African Medicines's Act has authorized the Health Minister to prescribe "conditions for the supply of more affordable medicines in certain circumstances so as to protect the health of the public". The Minister, "in particular may...determine that the rights with regard to any medicine under a patent granted in the Republic shall not extend to acts in respect of such medicine which has been put onto the market by the owner of the medicine, or with his or her consent" (article 15C.a)

As indicated by this text, the parallel import exception in South Africa is limited to medicines and does not directly benefit any interested party -like in Argentina and the Andean Group. The Law only confers the Ministry of Health the faculty to admit parallel imports in certain circumstances. Despite these limitations, the South African provision has been judicially challenged by foreign firms, and has been questioned by US government, which has conditioned the grating of US aid to South Africa on the repeal of such provision.

 

Compulsory licenses

WTO Member countries may also provide for different forms of compulsory licenses, which are explicitly authorized by the TRIPs Agreement (article 31). Such licenses may be granted for reasons relating to public health, emergency, lack of exploitation, refusal to deal, anticompetitive practices or other national interests.

Compulsory licenses are contemplated in the laws of the majority of cuntries, including developed countries. For instance, compulsory licenses to remedy anticompetitive practices have been extensively used in the United States, even after the adoption of the TRIPs Agreement (e.g. in the case of Sandoz-Ciba Geigy merger).

Argentine law (1995) offers a good model of how different types of compulsory licenses can be provided for on different grounds. Brazilian legislation requires that patents be industrially applied in Brazil.

Brazilian legislation requires that patents be industrially applied in Brazil, if economically viable. This clause will provide, after the termination of the transitional period in 1.1.2000, a good test on the extent to which working obligations are admissible in the framework of article 27.1 of the TRIPS Agreement.

Reversal of the burden of proof

The TRIPS Agreement imposes the reversal of the burden of proof in civil proceedings relating to infringement of process patents (article 34). It provides for two different options for the application of this rule, either solely to new products, or to all existing products when the title-holder has been unable to determine through reasonable efforts which is the process actually used. The first option should be the preferred one in developing countries, in order to limit the cases in which the reversal may be invoked. A too wide permission to require reversal may foster strategic litigation by large firms aiming at limiting competition, particularly by smaller firms.

Enforcement

As a result of recent legislative changes, the effectiveness of provisional measures that a patent holder may obtain against an alleged infringer has been strengthened. At the same time, some foreign pharmaceutical firms have become more aggressive in enforcing their existing process patents, even if they confer a narrow or doubtful protection. For instance, several local companies have been sued in Chile and Argentina accused of infringement of patent processes which were not actually used in those countries (such companies imported products from countries where no patent protection on processes and/or products existed).

In the case of Chile, the law permits the title-holder to request a judicial ban of the activities of the alleged infringer, until the case is finally decided. This has permitted to block the commercialization of products by local companies for significant periods, though later on the accusation was dismissed.

In Argentina, the current law allows the defendant to continue in the commercialization of an allegedly infringing product, provided that he/she provides a guarantee for the case the infringement were proven. This provision has been judicially challenged as inconsistent with the TRIPS Agreement, but held legitimate so far by courts.

The use of "strategic litigation", especially against small and medium firms even if weakly grounded, as a means to discourage and suppress competitors, has been observed in developed countries, such as in the United States (Barton, 1995, p. 163). The way in which the law addresses the issue of provisional judicial measures may be, therefore, as crucial as the treatment of other substantive issues for a fair application of the patent regime.

Transitional periods and "pipeline"

Developing countries, Least Developed Countries (LDCs) and economies in transition, were recognized transitional periods (article 65) to implement the Agreement. The latter will become obligatory for the former countries on January 1st, 2.000. Products that are not patentable as of that date need to be protected as from year 2.005.

The provision of such periods was an important element in the delicate balance reached as an outcome of negotiations. They were included to allow developing countries time to elaborate and adopt the required legislation, and to design any other policies necessary to minimize the possible negative effects of the new rules.

The transitional periods granted by the Agreement are automatic, i.e. their application is not subject to any reservation, declaration, notification or permission. However, many developing countries have been under pressure by some developed countries to accelerate the pace of reforms, so as to give immediate or even retroactive application to the TRIPs Agreement standards.

The WTO Secretariat and the Council for TRIPS have confirmed the automatic nature of the transitional periods. However, in Argentina and Brazil, some foreign companies argued before the courts that, in the absence of a specific reservation by the government, those periods had been waived and, hence, the Agreement was fully applicable as of the date of approval of the Final Act of the Uruguay Round. Some court decisions followed this approach, thus putting at risk the delayed introduction of the new patent regime.

The main issue dealt with by those decisions was the possible immediate application of the 20 years minimum term -as provided under article 33 of the TRIPS Agreement- to process (and other patents) granted before the adoption of the Agreement for a shorter term (15 years). This issue ostensibly divided courts' opinions both in Argentina and Brazil. Some have accepted the argument that, in the absence of an express reservation, the transitional period had been waived. Others denied this flawed argument, and only admitted the application of the 20 years term to patents applied for but not granted before the new regime entered into force.

The U.S government and pharmaceutical industry have attempted to obtain a retroactive recognition of protection for already patented pharmaceuticals (under the so-called "pipeline" protection).

In Mexico (1991) and Brazil (1996) patent laws allowed for the retroactive protection of patents granted elsewhere (if the invention had not been marketed before).

The same approach was accepted by Ecuador in a bilateral agreement with the United States. Though promptly implemented by a Decree, the bilateral agreement never obtained parliamentary approval in Ecuador. The Junta del Acuerdo de Cartagena (the executive body of the Andean Group) requested the Tribunal Andino de Justicia (Andean Court of Justice) to consider the legality of the retroactive recognition of patents. The Tribunal found, in a landmark decision (Process No. 1-AI-96) that the retroactive recognition with patents was in essential contradiction to the novelty principle under patent law, and ordered Ecuador to derogate said decree and cancel the patents granted thereunder.

Several cases have also been reported relating to developing countries in accession to WTO, which have been pressured by industrialized countries not to apply the transitional periods and to confer levels of protection higher than required under the Agreement.

In view of the possible negative impact of product pharmaceutical patents on the access to medicines in developing countries, and of the little impact, if any, that the introduction of patents may have as and inducement to R&D by local or foreign pharmaceutical firms in such countries, it seems advisable -as concluded by Prof. Scherer- that those countries should apply to the full posible extent the transitional periods allowed under the TRIPs Agreement.

Exclusive marketing rights (EMRs)

Article 70.9 of the Agreement obliges to grant EMRs on inventions covered by patent applications on "pharmaceutical products" during the transitional period. There is no indication in the Agreement in respect of the nature, scope and extent of such rights. The definition of these issues has been left to national legislation and should be made in a manner that does not nullify the transitional periods.

For those countries that apply the transitional periods for the recognition of pharmaceutical (or agrochemical) product patents, the interpretation of EMRs remains an ambiguous issue. An important point is whether EMRs would be deemed to be of similar effects than a patent, and the extent to which they may be subject to exceptions and compulsory licenses. Though opinions on these issues widely diverge, it seems logic to think that EMRs may not be equivalent or stronger than patents, since this would supress, in practice, the existence of a transitional period. EMRs may, therefore, be conceived as an exclusive right to obtain a remuneration from those that use the invention, until the patent is granted (or refused).

EMRs have been granted at least in one case. The Argentine Patent Office conferred such rights in favour of a U.S company in September 1998. Several elements of that administrative act illustrate the contradiction between the provision of a transitional period and the granting of EMRs.

In the referred case, the patent application did not cover a new chemical entity, but just a formulation form of a product (olanzapine) which was in the public domain in Argentina. In addition, the claimed formulation had been disclosed in a previous foreign patent owned by the same company and, therefore, did not meet the patentability requirements.

As one of the basis for the application of EMRs, the U.S company alleged a patent granted in Luxembourg after six days of procedures...In Luxembourg patents are granted without prior examination, and without any guarantee on the existence, novelty, etc. of the invention.

Despite these fragile grounds, the U.S company has attempted to block the commercialization by third parties of any product containig the active ingredient. A provisional measure by an Argentine court has prevented the company to do so, but the final outcome of the case is still unknown.

This evident abuse of article 70.9 of the TRIPs Agreement indicates that developing countries under a transitional period should ensure that EMRs, if granted, should:

* apply only to new chemical entities, since the rationale of said article clearly is to provide protection to such entities, and not to a simple formulation of a known product;

* require that a patent obtained in other WTO Member that serves as a basis for the EMRs, be granted in a country with a real and serious examination procedure.

Dispute settlement

One of the basic trade-offs for developing countries in the negotiation of the TRIPs Agreement was the exclusion of unilateral retaliatory actions, such as those imposed under section 301 of the U.S Trade Act. A basic obligation of all WTO Members is to channel any controversy relating to intellectual property rights through the multilateral procedure under the "Dispute Settlement Understanding". While several complaints have been filed under the TRIPs Agreement, involving alleged infractions by developing and developed countries, only one case has been decided (USA against India on the implementation of the "mail box" of article 70.8).

In this decision, India was deemed to be in violation of its obligation to provide for a mechanism of deposit of pharmaceutical patent applications, as stipulated in article 70.8. The decision held that India had to adopt positive legislation in order to implement the so-called "mail box" provision. The panel refused to define the scope of the "exclusive marketing rights" (EMRs), since this was not an issue under dispute.

The United States has continued to "classify" and threaten some developing countries under its Trade Act for reasons related to intellectual property rights. U.S law determines that a foreign country may be deemed to deny "adequate and effective protection" of IPRs notwithstanding that said country comply with the specific obligations stipulated by the TRIPs Agreement. One country (Argentina) has been sanctioned in 1997 and many others are on the list.

 

Dadta submitted for marketing approval

The TRIPs Agreement obliged to protect confidential data submitted for the registration of new chemical entities (article 39.3), but it did not create exclusive rights on such data. The only protection conferred under the Agreement is against unfair commercial practices in the framework of unfair competition law. The granting of exclusive rights on the data would in practice amount to the granting of a patent prior to the expiration of the transitional period authorized by the TRIPs Agreement.

Once data on a new drug have been submitted, their use by a national health authority to study and approve a subsequent application on the basis of similarity, does not entail a violation of the confidentiality obligation under the Agreement.

Argentina has implemented article 39.3 along these lines (law 24.766, 1996). Nevertheless, the United States, upon request of the U.S pharmaceutical industry, retaliated in 1997 against Argentina arguing that Argentine confidentiality law contradicted "international standards". Argentina was subject to a commercial sanction by the U.S government (withdrawal of 50% of the General System of Preferences). The law, however, has remained unchanged.

The granting of marketing approval is independent from the granting and enforcing of patent rights. In Europe, for instance, the former may be granted to any party that complies with the applicable technical requirements. In the United States, specific procedures are established for those patent holders that wish to be notified in the case a third party requests approval of a product covered by the patent.

It is not, hence, within the competence of health authorities to determine whether a given product is covered or not by a valid patent. Patent rights ľas any other IPRs- are private rights and should be enforced by the title holders through the legal means available to them.

Conclusions

Developing countries are having a hard time in implementing the TRIPs Agreement in the area of pharmaceuticals. The transitional periods are running out and such countries are under the continuous pressure of some countries (notably the United States) to grant a protection broader than required under the Agreement.

The Agreement leaves room for maneuvre to design and apply national patent laws in a manner that is consistent with health policies and priorities, and it provides for transitional periods that are automatically applicable by all developing countries, LDCs and economies in transition.

Developing countries that are introducing patent protection for medicines are facing a number of legal and administrative problems, and need to take decisions on how to deal with several important issues in the framework of the TRIPS Agreement.

The transition to the new scenario of product patent protection has been considerably traumatic in many Latin American countries. Patent Offices have received an increased number of applications, and need to face complex issues relating to the patentability particularly of new uses, as well as to set forth rules to define the scope of the protection to be conferred.

Latin American countries have used to different degrees, the room for manoeuvre left by the TRIPS Agreement to legislate at the national level. Despite that the rules adopted in some areas (for instance, on parallel imports and compulsory licenses) are legitimate, this has nor prevented the US government and pharmaceutical industry from continuing questioning such rules.

The implementation of the TRIPS Agreement in the patent field has given rise to increased speculative litigation, particularly with an aim to expand the term of pre-existing patents. Strategic litigation to compete out local companies has also increased.

Patent applications relating to new chemical entities are a small fraction of the total applications made in the pharmaceutical field. The great majority correspond to processes, particular formulations of a known active ingredient and, where admitted, new and second uses of existing medicines. If granted, such applications may expand protection well beyond that of a particular active ingredient, and may be used to block the commercialization of products in the public domain.

Though process patents should not impair the commercialization of a product obtained with a different method, broadly drafted claims -and the reversal of the burden of proof- may be used to threaten competitors or to effectively exclude them from the market.

In order to develop a legal framework for the protection of pharmaceuticals that -as required by article 7 of the TRIPS Agreement- ensures a balance between the interests of producers and users of technology, several issues should be carefully examined at the national level, including the limitations to patentability, the admissibility of exceptions to exclusive rights, particularly for commercial experimentation and parallel importation, and the provision of compulsory licenses.

 

 

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