[Ip-health] PPTs from two presentations in New Dehli, Data registration and IPR and WIPO patent harmonization

[ds20@uow.edu.au]

Wilder, WHO and Discriminatory Pricing=0D
The proposed appointment of Wilder to the WHO has not been=0D
very surprising. Wilder is one of the biggest proponents of=0D
discriminatory pricing. He has previously participated in=0D
the Workshop on Differential Pricing and Financing of=0D
Essential Drugs, a workshop organized by the WHO and the WTO=0D
Secretariats in April 2001. Richard Wilder participated in=0D
Session V and at that time, the name of his firm was Powell,=0D
Goldstein, Frazer & Murphy. The main underplaying=0D
requirements for discriminatory pricing are the total=0D
abrogation of the compulsory licensing and the international=0D
exhaustion. The work has been divided between Patricia=0D
Danzon and Richard Wilder where Patricia Danzon argues for=0D
abolition of the compulsory licensing and Richard Wilder=0D
argues for eliminating of international exhaustion and=0D
parallel trade. I have discussed Patricia Danzon=E2=80=99s lack of=0D
understanding of economics and basic law when she argued in=0D
one of her articles by insisting that compulsory licensing=0D
is permitted in cases of =E2=80=9Cnational emergency=E2=80=9D  only=0D
and =E2=80=9Cthis may be appropriate provided that =E2=80=9Cnational=0D
emergency=E2=80=9D is narrowly defined.=E2=80=9D (Patricia Danzon,=0D
Differential Pricing for Pharmaceuticals: Reconciling=0D
Access, R&D, and Patents, CMH Working Paper Series, Paper=0D
No. WG2: 10, Commission on Macroeconomics and Health (A WHO=0D
Commission examining the Interrelations among investments in=0D
health, economics growth and poverty reduction, 2001, p.4).=0D
Wilder picked up the same subject but this time another=0D
aspect of the differential pricing i.e. that of parallel=0D
imports.=0D
Some of the comments of Richard Williams in that article are=0D
below to give the gentleman=E2=80=99s views of parallel imports.=0D
=E2=80=9CMost countries, including most developing countries,=0D
provide for national rather than international exhaustion in=0D
their national legislation. This is consistent with the view=0D
that Article 28.1(a) of the TRIPS Agreement confers on the=0D
patent owner the exclusive right to prevent others from=0D
importing patented products.=E2=80=9D(Richard Wilder, Market=0D
Segmentation: Techniques, Actors and Incentives-The use of=0D
Intellectual Property Rights, Workshop on differential=0D
Pricing and Financing of Essential Drugs, World Health=0D
Organization and World Health Organizations Secretariats, 8-=0D
11 April 2001, Hosbjor, Norway ). He has given examples of=0D
Brazil as an example of national exhaustion. (Law No. 9279=0D
(May 14, 1996, Article 42 providing the right to prevent=0D
third parties from importing a product that is the object of=0D
the patent. Article 43.IV indicates that the provisions of=0D
Article 42 do not apply to, inter alia, products that have=0D
been =E2=80=9Cintroduced onto the domestic market directly or by the=0D
patent holder or with his consent.=E2=80=9D). This is not the whole=0D
fact about Brazil. Article 68 of the Brazilian Patent Act=0D
says that in case, the patent holder is importing the=0D
patented product, then anybody can import such product. IN=0D
fact the USA went to the Dispute Settlement System of the=0D
WTO against this provision of the Brazilian Patent Act. I do=0D
not know about the examples from developing countries which=0D
Wilder had in mind because all major developing countries=0D
such as South Africa, Kenya, India, Argentina are having=0D
international exhaustion. In fact, in the Doha Declaration,=0D
a special provision had been incorporated dealing with=0D
international exhaustion of patented rights. It says=0D
=E2=80=9CThe effect of the provisions in the TRIPS Agreement that=0D
are relevant to the exhaustion of intellectual property=0D
rights is to leave each member free to establish its own=0D
regime of such exhaustion without challenge, subject to the=0D
MFN and national treatment provisions of Articles 3 and 4.=E2=80=9D=0D
AS far as exhaustion of rights in the USA is concerned, the=0D
exhaustion doctrine has been formulated by the US Supreme=0D
Court in United V. Univis Lens Co. (316 U.S. 241, 250 (1942):=0D
=E2=80=9CThe patentee may surrender the monopoly in whole by the=0D
sale of his patent or in part by the sale of an article=0D
embodying that invention. His monopoly remains sop long as=0D
he retains the ownership of the patented article, but sale=0D
of it exhausts the monopoly in that article and the patentee=0D
may not thereafter , by virtue of his patent, control the=0D
use or disposition of the article. Bloomer v. McQuewan, 14=0D
How. 539, 549-50; Adams v. Burke, 84 U.S. 453, 17 Wall. 453,=0D
21 L. Ed. 700; Hobbie v. Jennison, 149 U.S. 355, 37 L. Ed.=0D
766, 13 S. Ct. 879=E2=80=9D.=0D
I have discussed in detail the US position in my=0D
article =E2=80=9CBrazil, the Pharmaceutical Industry and the WTO=E2=80=9D=
=0D
and =E2=80=9CIndia, the pharmaceutical Industry and the Validity of=0D
TRIPS=E2=80=9D. The US position has also been discussed in detail by=0D
Margareth Barett (Barett, M., (2000) The United States=E2=80=99=0D
Doctrine of Exhaustion: Parallel Imports of Patented Goods,=0D
Northern Kentucky University Law Review, 27, p. 911-984).=0D
Two important recent cases in the USA dealing with=0D
exhaustion of patent rights are Cyrix Corporation v. Intel=0D
Corporation (846 F. Supp. 522 (E.D. Tex. 1994 aff=E2=80=99d 42 F. 3d=0D
1411 (Fed. Cir. 1994))  and LG Electronics v. Asustek=0D
Computer (N.D. Cal. 2002).=0D
IN Cyrix, the Court in para 32 called it a =E2=80=9Cfundamental=0D
doctrine of patent law=E2=80=9D first enunciated by the Supreme=0D
Court 120 years ago in Adams v. Burke(84 U.S. 453, 456=0D
(1873).:=0D
=E2=80=9CIn the essential nature of things, when the patentee , or=0D
the person having his rights, sells a machine or instrument=0D
whose sole value lies in its use, he receives the=0D
consideration for its use and he parts with the right to=0D
restrict that use. The article, in the language of the=0D
court, passes without the limit of the monopoly. That is to=0D
say, the patentee or his assignee having in the act of sale=0D
received all the royalty or consideration which he claims=0D
for the use of the purchaser without further restriction on=0D
account of the monopoly of the patentees.=E2=80=9D=0D
The exhaustion doctrine is so strong that the Cyriux Court=0D
observed that =E2=80=9CAny disposition of an allegedly patented=0D
article, so long as it within the license grant, exhausts=0D
all patent rights in that article. A conventional sale of an=0D
article is not required for exhaustion to apply, because the=0D
form of a disposition does not govern.=E2=80=9D=0D
The Cyrix Court quoted from United States v. Masonite Corp.,=0D
316 U.S. 265, 277-78 (1942)=0D
=E2=80=9CThere are limitations on the power of the patentee to=0D
attach conditions to the use of the patented article. As=0D
Chief Justice Taney said in Bloomer v. McQuewan, 14 How.=0D
539, 549, when the patented product =E2=80=98passes to the hand of=0D
the purchaser, it is no longer within the limits of the=0D
monopoly. It passes outside of it, and is no longer under=0D
the protection of the act of Congress.=E2=80=99 IN applying that=0D
rule, this Court has quite consistently refused to allow the=0D
form into which the parties chose to cast the transaction=0D
to govern. The test has been whether or not there has been=0D
such a disposition of the article that it may fairly be said=0D
that the patentee has received his reward for the use of the=0D
article. IN determining whether or not a particular=0D
transaction comes within the rule of the Bloomer case,=0D
regard must be had for the dominant concern of the patent=0D
system. As stated by Mr. Justice Story in Pennock v.=0D
Dialogue, 2 Pet. 1, 19, the promotion of the progress of=0D
science and the useful arts is the =E2=80=98main object=E2=80=99, reward of=
=0D
inventors is secondary and merely a means to that end.=E2=80=9D=0D
In Intel Corporation v. ULSI System Technology 995 F. 2d=0D
1566 (Fed. Cir. 1993) cert. denied 127 L. Ed. 2d 216, 114 S.=0D
Ct. 923 (1993) , the Feral Circuit observed=0D
=E2=80=9CThe law is well settled that an authorized sale of a=0D
patented product places that product beyond the reach of the=0D
patent. See Bloomer v. Millinger, 68 U.S. (1 Wall.) 340, 350-=0D
51=E2=80=9D=0D
Fed. Cir. As recently as 1997, Fed. Cir. In B. Braun Medical=0D
v. Abbott 124 F.3d 1419, 1426 (Fed. Cir.) =E2=80=9Can unconditional=0D
sale of a patented device exhausts the patentee=E2=80=99s right to=0D
control the purchaser=E2=80=99s use of the device thereafter.=E2=80=9D=0D
The applicability of the US exhaustion doctrine to foreign=0D
sale has been discussed in the case of LG Electronics v.=0D
Asustek Computer 2002 U.S. Dist. LEXIS 25956 (N.D. Cal.=0D
2002). Asustek Computer was a foreign corporation with=0D
manufacturing facilities outside the United States. The=0D
exhaustion doctrine as enunciated by the US Supreme Court in=0D
Univis was found applicable to the computers imported into=0D
the USA having LG-patented microprocessors.=0D
There are some freak cases by the Court of Appeals for the=0D
Federal Circuit known for introduction of judicial=0D
perversion one of which has been quoted by Wilder such as=0D
Hewlett-Packard Company v. Repeat-O-Type Stencil=0D
Manufacturing Corporation, Inc. 123 F. 3d 1445, 1451 (Fed.=0D
Cir. 1997) which says that =E2=80=9CThe authority to sell a=0D
purchased device, however, does not include the right to=0D
make a new device or to reconstruct one which has been=0D
spent..=E2=80=9D  Another is in Anton/Bauer v. PAG Ltd. 329 F.3d=0D
1343 (Fed. Cir. 2003)  rehearing denied by Anton/Baufri Inc.=0D
v. PAG, 2003 U.S. App. LEXIS 14591) (Fed. Cir. June 27,=0D
2003) where although Federal Circuit confirmed the decision=0D
of the District Court (Anton/Bauer v. PAG, 2002 U.S. Dist.=0D
LEXIS 11583 (D. Conn. June 13, 2002), where the Federal=0D
Circuit made one of the most perverted observation. It said=0D
=E2=80=9CThe Supreme Court enunciated this doctrine when it stated=0D
that =E2=80=9Cincident to the purchase of any article, whether=0D
patented or unpatented, is the right to use and sell it, and=0D
upon familiar principles the authorized sale of article=0D
which is capable of use only in practicing the patent is a=0D
relinquishment of the patent monopoly with respect to the=0D
article sold.=E2=80=9D United States v. Univis Lens co. 316 U.S.=0D
241, 249, 53 USPQ 404, 407, 86 L. Ed. 1408, 62 S. Ct. 1088=0D
(1942). In other words, sale of an unpatented article=0D
exhausts the seller=E2=80=99s right to control the future sale and=0D
use of that article, but only certain circumstances exhaust=0D
exhaust=E2=80=99s the seller=E2=80=99s patent rights and result in an=0D
implied license.=E2=80=9D Did the quote of the US Supreme Court use=0D
the term =E2=80=9Conly in certain circumstances=E2=80=9D? The US Supreme=0D
court did not distinguish between patented or unpatented.=0D
Who gave authority to the Federal Circuit to subvert the US=0D
Constitution?=0D
However, the exhaustion doctrine is so strong that it covers=0D
even the essential facility doctrine which the Federal=0D
Circuit tried to remove from the US competition laws in In=0D
re Independence (In re Indep. Serv. Org. 203 F.3d 1322, 1325=0D
(Fed. Cir. 2000)).. In Cyrix and in Anton/Bauer, the Courts=0D
on the basis of Univis confirmed that if the purchased=0D
article can be used only in combination with certain=0D
patents, then that use would not amount to infringement. In=0D
Anton/Bauer, Federal Circuit observed =E2=80=9CThe Court=E2=80=99s statemen=
t=0D
in Univis demonstrated how closely related the exhaustion=0D
license doctrine is to the grant of an implied license.=0D
Indeed they suggest that an implied license  stems from the=0D
exhaustion of a patent right.=E2=80=9D=0D
The US Ban on parallel imports of medicines is controlled=0D
by  the Prescription Drug Marketing Act of 1987 (the PDMA),=0D
P.L. 100-293(Apr. 22 1988). It amended the FFD&C Act to=0D
prohibit the re-importation of U.S. produced drugs by=0D
persons other than the manufacturer except when authorized=0D
by the Secretary for emergency medical care. I have analyzed=0D
this Act in my article =E2=80=9CBrazil, the Pharmaceutical Industry=0D
and the WTO.=E2=80=9D The Prescription Drug Marketing Act, 1987 and=0D
its history suggest that it is violative of Article X(1) of=0D
GATT 1994 and it would be covered by Report of the Panel in=0D
United States =E2=80=93 Standards for Reformulated and Conventional=0D
Gasoline, (WT/DS2/R), Report of the Appellate Body in United=0D
States-Standards for Reformulated And Conventional Gasoline=0D
(adopted on 20th May 1996) 35 I.L.M. 1996, World Trade=0D
Organization) and Thailand =E2=80=93 Restrictions on Importation of=0D
and Internal Taxes on Cigarettes, Report of the Panel on 7=0D
November 1990 (DS10/R =E2=80=93 37S/200).=0D
Wilder and Danzon along with others like John Barton John=0D
Barton, Differentiated Pricing of Patented Products, Working=0D
Paper NO. 63, Indian Council for Research on International=0D
Economic Relations, March 2001), Juan Rovira, organizations=0D
like the World Bank, WTO and now WHO (=E2=80=98More Equitable=0D
Pricing for Essential Drugs: What Do We Mean and What are=0D
the Issues?, Background paper for WHO-WTO Secretariat=0D
Workshop on the Differential Pricing and Financing of=0D
Essential Drugs, Hosbjor, Norway, 8-11 April 2001 (prepared=0D
by the WHO Secretariat) (2001)  have been pushing for=0D
discriminatory pricing as a panacea for making drugs=0D
available but the whole effort is directed at elimination of=0D
compulsory licensing and parallel trade. We have recently=0D
seen a fraud committed by the EC (Access to Medicines : EU=0D
clears plan to ensure delivery of s cheap medicines to=0D
developing Countries, Brussels, 26 May 2003 available at=0D
http://europa.eu/int/comm/trade/csc/med08_en.htm) when in=0D
the name of making drugs avialbe to the poor countries, it=0D
said that in case of discriminatory pricing, compulsory=0D
licensing pricing would not be required. (Trade and=0D
Development: Access to Medicines available at=0D
http://europa.eu.int/comm/trade/csc/med08qa_en.htm (q.4. Is=0D
there any link between this regulation and the Trade related=0D
Aspects of Intellectual Property Rights (TRIPs) discussions=0D
on enabling developing countries to use of compulsory=0D
licenses to manufacture the drugs they need?=0D
In principle, no. The discussion on compulsory licensing at=0D
the WTO TRIPs Council is a separate exercise. However, in=0D
practice it=E2=80=99s clear that if poorer countries get the=0D
medicines they need under tiered pricing arrangement, they=0D
won=E2=80=99t need to use compulsory licenses.=E2=80=9D)=0D
Some of these scholars along with Amir Attaran, Keith=0D
Maskus, Joseph DiMasi are the classical examples of how=0D
academics is becoming the last refuge of scoundrels.=0D
Daya Shanker=0D
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