[Hague-jur-commercial-law] [Fwd: Bipartisan drug import bill fixes exhaustion and contract barriers, runs afoul of FTAs and Hague Convention]

[Thirukumaran Balasubramaniam]

-------- Original Message --------
Subject: 	Bipartisan drug import bill fixes exhaustion and contract 
barriers, runs afoul of FTAs and Hague Convention
Date: 	Fri, 23 Apr 2004 16:54:50 -0400
From: 	Thirukumaran Balasubramaniam <thiru@cptech.org>
To: 	ip-health@lists.essential.org
CC: 	kovarjd@state.gov, vespinel@ustr.gov, "Ness, Jennifer" 
<Jennifer.Ness@USPTO.GOV>, Manon Anne Ress <manon.ress@cptech.org>



CPTech has spent some time talking with congressional staffers and legal 
experts in discussing S.2328, entitled, the “Pharmaceutical Market 
Access and Drug Safety Act of 2004” introduced in the United States 
Senate on April 21st, 2004. This bipartisan bill is sponsored by Sen 
Dorgan (D-ND), Sen Snowe (R-ME), Sen Kennedy (D-MA), Sen McCain (R-AZ), 
Sen Daschle (D-SD), Sen Lott (R-MS), Sen Stabenow (D-MI), Sen Johnson 
(D-SD), Sen Pryor (D-AR), Sen Feingold (D-WI) and Sen Chafee (R-RI).

With respect to the question of exhaustion, the bill unequivocally 
declares on page 63, subparagraph (h), that,

“It shall not be an act of infringement to use, offer to sell, or sell 
within the United States or to import into the United States any 
patented invention under section 804 of the Federal Food, Drug, and 
Cosmetic Act that was first sold abroad by or under authority of the 
owner or licensee of such patent."

It is the view of CPTech that this language would afford the United 
States a regime of international exhaustion for prescription 
pharmaceutical drugs thus solving the limitations posed by the Jazz 
Camera Photo decision. We note that Article 5(d) of the Doha Declaration 
on the TRIPS Agreement states that:

“The effect of the provisions in the TRIPS Agreement that are relevant 
to the exhaustion of intellectual property rights is to leave each 
member free to establish its own regime for such exhaustion without 
challenge, subject to the MFN and national treatment provisions of 
Articles 3 and 4.”

Bill S. 2328 implements Article 5(d) of the Doha Declaration in 
establishing a regime of international exhaustion for prescription 
pharmaceutical drugs in the United States.

In addition, this bill appears to amend the Clayton Act (15 U.S.C. 12 et 
seq) by making it illegal to contractually prohibit parallel 
importation. We note that this is in direct conflict with bilateral free 
trade agreements (FTAs) that the U.S. has negotiated with Australia 
(Article 17(9)(4) of the U.S.-Australia FTA), Morocco (Article 15.9(4) 
of the U.S.-Morocco FTA) and Singapore (Article 16(7)(2) of the 
U.S.-Singapore FTA). The U.S.-Australia FTA does not permit parallel 
imports if the patent holder has placed restriction on parallel imports 
through a contract or “other means” (Article 17(9)(4). The U.S.-Morocco 
FTA permits the patent holder to prevent the importation of an 
invention, regardless of whether it has already been sold abroad. 
Parties can limit this to cases where the patent owner has forbidden 
parallel imports by contract (Article 15(9)(4). The U.S.-Singapore FTA 
permits patent holders to block parallel imports by mandating 
cross-border enforcement of contracts (Article 16(7)(2).

We intend to ask the U.S. Department of State, the U.S. Patent and 
Trademark Office and the USTR to comment on the relationship between 
this bill and the position of the U.S. government at the current 
negotiations at the Hague Jurisdiction and Enforcement of Judgments 
Convention and with respect to the aforementioned FTAs with Australia, 
Morocco and Singapore.




Thirukumaran Balasubramaniam
Consumer Project on Technology