Trade Related Intellectual Property Agreement

John Ries, SPHA511

Intellectual Property• Intellectual property is useful information or knowledge

that are the property of the inventor/creator. What are different types of intellectual property?– Patents grant the inventor of a product or process

exclusive rights to the manufacture, use of, and sale of the invention.

– Copyrights are the exclusive legal rights of authors, playwrights, artists and publishers to publish or dispose of their work as they see fit.

– Trademarks are designs and names by which merchants or manufacturers designate and differentiate their products.

– Other types of intellectual property include industrial designs, geographic indications, integrated circuit layouts, and trade secrets

International Recognition

• Copyrights and trademarks in one country are recognized by other countries under multilateral treaties. On the other hand, patents must be applied for in every country where protection is sought (the exception is the European Patent Organization (EPO) allows one single patent filing to provide protection in all member countries).

Patents• Patents encourage invention: Create temporary

monopoly for (20 years) so patent holder can recoup investment.

• An invention has to be novel (new), inventive (not obvious to person with ordinary skills in area), and useful (to commerce).

• Patent systems traditionally have differed across countries in a number of dimensions– first to file versus first to invent: patents granted on the

basis of either being the first to invent or being the first to get to the patent office.

– procedure of challenging patents (prior to approval or after approval)

– degree of novelty required– length of process

TRIPS Agreement accomplishments

• Patent protection for both products and processes must be available for twenty years.

• Special transitional arrangements: Developing countries and least developing countries given time to put required organizations in place. Developing countries can delay patent protection for pharmaceuticals and agricultural chemicals until 2005 (extended until 2008).

Compulsory licensing

• “Compulsory licensing” requires that technology be sold to local firms

• According to TRIPs, it can be imposed if patent holder will not make invention available at “reasonable commercial terms” but must be paid “adequate remuneration.” Compulsory licensing can be used for “national emergencies” and “other circumstances of extreme urgency.”

• In 2003, the WTO agreed on rules “that will make it easier for poorer countries to import cheaper generics made under compulsory licensing if they are unable to manufacture the medicines themselves”.

Parallel imports• Parallel imports (aka grey-market imports) are

goods produced under patent that are sold in one country then imported into a second market without the authorization of the owner of the intellectual property. The TRIPs agreement allows countries to maintain different standards regarding the legality of these imports– National exhaustion of IPRs implies that parallel imports

are illegal but international exhaustion makes them legal.– The US and EU have national and community exhaustion

whereas Japan has international.• Pharmaceutical parallel imports: Technically

illegal as US has national exhaustion of IPRs. Battle being fought as safety issue.

Price discrimination and efficiency• When there exists imperfect competition, price discrimination

(two or more prices) can allow more consumers to purchase and reduce deadweight.

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P1

PC

P2

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The firm needs to be able to segment markets (keep high valuation customers from buying at low price)

Decision removes final patent obstacle to cheap drug imports

• (This article seems to be missing from the readings package)

• Canada was one of the first countries to enact legislation that allowed generic pharmaceutical companies to produce drugs under compulsory licensing for other countries

Groups ask Ottawa to ban drug exports before U.S. Congress legalizes trade

Published: Thursday, November 23, 2006 | 5:18 PM ET

Canadian Press: MICHELLE MACAFEE

WINNIPEG (CP) - A coalition of pharmacists and patient advocates wants the federal government to ban prescription drug exports to the United States in a bid to get ahead of any renewed efforts by the new U.S. Congress to legalize the trade.

Canadian patients could face widespread drug shortages if Congress legalizes imports, says a spokesperson for the Canadian Pharmacists Association.

A sweeping ban would effectively kill the cross-border trade, which at its peak was worth more than US$1 billion a year but has struggled in recent years against the strong Canadian dollar and supply restrictions from brand-name drug makers.

Clinton’s Foundation Brokers AIDS Deal By ANAND GIRIDHARADAS

MUMBAI, Nov. 30 — The cost of treating children infected with H.I.V. and AIDS is poised to plummet next year, under a deal announced today between two Indian drugmakers and former President Bill Clinton’s foundation.

Cipla and Ranbaxy Laboratories agreed to make 19 different anti-retroviral drugs designed for children available to 62 developing countries at an average price of $60 a year, which is less than half of the lowest current price, the Clinton Foundation said in a statement.

Indian drug companies were able to produce the special pediatric drugs because they mixed together a customized combination of chemicals invented by Western companies but never patented under India’s once-lax intellectual-property protections. Yet India has recently changed its patent rules, under its World Trade Organization commitments, so as to protect Western innovations.