[Ip-health] Thailand, Wall Street Journal and Media Prostitution

[Daya Shanker]

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Thailand, Wall Street Journal and Media Prostitution
Dear Professor Baker
Recently I read the editorial from the Wall Street Journal regarding
compulsory licensing in Thailand entitled =91Theft in Thailand.=94 The edit=
orial
followed the American Enterprise Institute=92s Roger Bate=92s  article  ent=
itled
=93Tha-ing Pharma=94 again in the Wall Streets Journal  suggesting that the=
re has
been a concerted attempt to denounce something which is not only legal but
perfectly in compliance with the TRIPS Agreement, the agreement which in
itself is an illegitimate and invalid international treaty. First I will
discuss the main points of Wall Street Editorial followed by Roger Bate=92s
argument to make people realize the amount of fraud, scandal and obscenity
that goes in the name of media independence and neutrality.
Wall Street Journal=92s editorial is unique in its vituperation and the way=
 it
has questioned any discussion of multinational=92s expansion of monopolizat=
ion
itself when it started its editorial by saying that =93The crusade against =
drug
patents was one fought in the halls of the World Trade Organization.=94 The=
 Thai
government=92s issue of compulsory licenses for Stocrin, Kaletra, Clopidogr=
el
and Plavix for protecting public health and providing its citizens access t=
o
medicines was termed stealing whereas the newspaper=92s editorial itself ac=
cepts
that the issue of compulsory licensing by the Thai government could be
technically legal.
The editors of the Wall Street Journal either do not have the basic
understanding of the TRIPS Agreement and patenting provisions when they cla=
im
that patent is a property and designate use of compulsory licensing as seiz=
ure
of private property and private assets or in the name of newspaper journali=
sm,
editors have indulged in an obscene form of media prostitution. Patent is n=
ot
a property.  A patent is a temporary monopoly given to either the innovativ=
e
firms or individuals or group of individuals as an incentive to innovate. I=
t
is not a private property. The patenting is territorial, totally and
absolutely although like any other law in the case of the USA, the patentin=
g
monopoly laws are being expanded beyond the US territory which we call extr=
a
territoriality actively helped by the Court of Appeals for Federal Circuit,=
 a
policy institution with judicial powers as is evident from the series of
contradictory decisions (NTP v. Research in Motion, AT&T v. Microsoft, 399
F.3d 1325 (Fed. Cir. Mar. 2, 2005), cert. Den., 126 S. Ct. 568 (2005),
Pellegrini v. Analog Devices, 375 F.3d 1367 (Fed. Cir. 2004), Bayer v. Hous=
ey
Pharms, 304 F. 3d 1367 (Fed. Cir. 2003). In Eolas, the CAFC upheld Microsof=
t=92s
liability for infringement although the products had been sold abroad. The
decisions of CAFC were based on Section 271(f) which creates cause of actio=
n
when components of a patented invention are supplied from the USA. Eola
expounded two principles. One is that there is no physicality requirement f=
or
a component to fall within Section 271(f) and that the shipped component ne=
ed
not be directly used. AT&T v. Microsoft RIM is an exceptional expansionist
view of patent by the CAFC where the test for infringement under section
271(a) is not whether the infringement took place within the United States =
but
whether =93control and beneficial use=94 of the infringing system was withi=
n the
United States. It brings virtually all the outsourcing within the ambit of =
the
US patent act. The territoriality of the patent requires a firm to gain
benefit only in its area of patent, the area where the patent was developed=
.
This is the interpretation of the US Constitution as observed by the US
Supreme Court in Brown v. Duchesne =93The patent laws are authorized by tha=
t
article in the (US) Constitution which provides that Congress shall have po=
wer
to promote the progress of science and useful arts, by securing for limited
time to authors and inventors the exclusive right to their respective writi=
ngs
and discoveries. The power thus granted is domestic in its character, and
necessarily confined within the limits of the United States=85 They secure =
to
the inventor a just remuneration from those who derive a profit or advantag=
e,
within the United States, from his genius and mental labors.=94 Brown v.
Duchesne 60 US 183, 195 (1856).
The Wall Street Journal has repeatedly been using the terms such as seizure
and confiscation of private property and private assets to criticize
Thailand=92s issue of compulsory licenses only on the basis that Thailand d=
id
not consult the pharmaceutical industry before issuing compulsory licenses.=
 As
I have discussed later, the consulting a firm for the issue of a compulsory
license is not compulsory either under Article 27 or under Article 31 or un=
der
Article 5(A)(2) of the Paris Convention as incorporated in the TRIPS
Agreement. According to Wall street Journal, Merck was selling Stocrin at c=
ost
in Thailand. Can somebody check that?
Roger Bate from the American Enterprise Institute, an industry lobbying gro=
up
having among its alumina Patricia Danzon from the Wharton Business School
(known for writing pharmaceutical industry paid pamphlets as research paper
(Danzon, Patricia M. 2000: Testimony to the U.S. Senate Committee on Health=
,
Education, Labor and Pensions, Committee on Health, Education labor and
Pensions,
http://www.senate.gov/~labor/Hearings/j=85n613/dorgan613/rhodes/danzon/danz=
on.htm[1]
, dt. June 13, 2000, Danzon, Patricia (1997) Price Discrimination for
Pharmaceuticals: Welfare Effects in the US and EU Industry, Journal of heal=
th
Economics, 19, pp. 159-195), Henery Grabowski from Duke University (member =
of
the group having Joseph DiMasi and Hansen regularly producing the cost of d=
rug
development on the basis of private data supplied by the industry which the=
y
do not share with any body else DiMasi, J., Hansen, R. D. Grabowski, H. G. =
and
Lasgna, L. (1991) Cost of Innovation in the Pharmaceutical Industry, 10 J.
HEALTH ECO. 10, 107-142, DiMasi, J., Hansen, R. D. Grabowski, H. G. (2003) =
The
Price of Innovation: New Estimates of Drug Development Costs, J. Health
Economics, 22/2, 151-185), Barfield and Groombridge (I guess still with the
American Enterprise Institute (Barfield Claude E. and Mark A. Groombridge
(1999): Prohibition of Parallel Imports Through Intellectual Property Right=
s,
30, International Review of Indus. Prop. And Copyright L. 495 (1999) came u=
p
with his own arguments by labeling government pharmaceutical organization a=
s
=93historically corrupt.=94 Bate has quoted Lembit Rago, WHO=92s coordinato=
r of drug
safety and quality, to suggest that the prequalified drug would lead to the
development of resistance to such drug and as such since the GPO=92s drugs =
are
not prequalified, they would lead to drug resistance and that the use of
GPO-vir has led to between 40 and 60% resistance as seen in a study by
Thailand=92s Mahidol University. In fact there is no such study which says =
that
the resistance has been caused by the use of GPO-vir. Was GPO-vir a WHO
prequalified drug? If it was a prequalified drug, then any drug prequalifie=
d
or not would lead to the development of resistance to drugs when dealing wi=
th
bacterial or viral infections. Can somebody verify Mahidol University=92s s=
tudy
and let me know the details?
Any virus or bacterial disease would develop drug resistance. We have seen
that happening in every case ranging from influenza to TB to malaria. In fa=
ct
Malaria is not even viral or bacterial disease. The present set of antivira=
l
drugs does not  eliminate the HIV virus but essentially suppresses its
multiplication. I have read virtually every literature (humanly possible)
dealing with development of resistance to HIV drugs and have not seen one
which says that medicines which have been tested have been tested for
development of resistance at a particular dosage. When AZT was patented for
action against HIV, it was patented arbitrarily on the basis of the action =
of
AZT on murine leukemia virus in the laboratory by Wellcome Burroughs. The
patenting was confirmed by the Court of Appeals for Federal Circuit as I
mentioned before, a policy institution on the basis of the so called concep=
t
developed by Wellcome Burroughs without any experimental proof or human tri=
al.
The effect of AZT on murine leukemia virus had been published ten years
before. There was not even animal trial. The contention of Roger Bate that =
if
the medicine produced under compulsory licensee  would lead to the developm=
ent
of the resistance is quite mischievous and amounts to picking up pages from
PhRMA manual and use the forum provided by pamphlets such as the Wall Stree=
t
Journal to propagate his obscenities.
A unique argument has been advanced by Roger Bate that under WTO rules, onl=
y
in the case of health emergency, compulsory license can be issued. Then the=
re
is a normal PHRMA argument that it is not the high prices of drug that is
preventing the access to medicines, but   bad health systems and poor train=
ing
of medical professionals but the most pervert of Roger Bate=92s argument wa=
s
concerning price discrimination which he called fragile but sustainable pri=
ce
tiering system existing in Asian countries which prevents movement of
medicines from one country to another. We thought that Article 6 of the TRI=
PS
Agreement dealing with parallel imports and its exposition in the Doha
Declaration on public health has made things explicitly clear that each and
every country is free to get the patented products from the cheapest source
around the world. Discriminatory pricing among other things is the highest
form of monopolistic control and has been consistently justified by authors
such as Patricia Danzon as permitting pharmaceutical firms to earn maximum
profit so that they can invest more funds in their innovation activities.
Discriminatory pricing among others have been supported by the team assembl=
ed
by the Department of International Development, UK (DFID) which among other
included R. D. Mashelkar (Integrating Intellectual Property Rights and
Development Policy). However, from later writing, it was John Barton from
Stanford University who was the Chair of the DFID Commission, who would hav=
e
been the main proponent of elimination of parallel imports in line with the
pharmaceutical industry=92s efforts to eliminate parallel imports and the
Commission recommended that =93=85 and important component in establishing =
a
system of differential pricing is that markets need to be segmented to prev=
ent
law priced products undermining high price markets. For that purpose, it is
essential that developed countries put in place effective mechanisms that
prevent parallel importing of medicines. This is already broadly the case f=
or
the US and the EU, but appears not to be so for Japan.=94 The Commission le=
d by
John Barton and consisting among others of Mashelkar specifically recommend=
ed
that =93Developed countries should maintain and strengthen those legislativ=
e
regimes to prevent imports of low priced pharmaceutical products originatin=
g
from developing countries.=94 I can think of a lot of perversities but this=
 one
must be topping the list. Discriminatory pricing means total market
segmentation, elimination of compulsory licensing and ensuring that there i=
s
only one source of supplier from only one country or if more than one count=
ry,
total control by the multinational pharmaceutical supplier, the results of
which we have just seen in Africa, Latin America and Thailand.  What we are
witnessing is that there is a total convergence between the views of agents
operating openly for PhRMA and the UK Governmental Commission composed of J=
ohn
Barton, R. D. Mashelkar and others apparently working for access to medicin=
es
to poor developed countries (John Barton, Differentiated Pricing of Patente=
d
Products, Working Paper NO. 63, Indian Council for Research on Internationa=
l
Economic Relations(Headed by Mrs. Ahluwalia), March 2001). Other supporter =
for
price discrimination are familiar players from familiar institutions such a=
s
Juan Rovira from the World Bank (Juan Rovira, A Trade Framework for
Intellectual Property Rights, Equity Pricing and Market Segmentation, The
World Bank, Health, Nutrition and Population, World Bank Workshop, June 2,
2003;  Juan Rovira, Meeting on the Role of Generics and Local Industry in
Attaining the Millennium Development Goals (MDGs) in Pharmaceuticals and
Vaccines, Washington Ds, June 24-25, 2003 June). What we are witnessing in =
the
writings of the Wall Street Journal and Roger Bate is that written provisio=
ns
of  international treaties such as the TRIPS Agreement itself a product of
unilateralism is not sacrosanct. It is the mischievous and manipulated
writings of the editors of the Wall Street Journal  and industry financed
individuals having access to certain scandalous forums who are not only
dictating what should enter a treaty but how  the provisions of that treaty
are to be interpreted. Quite often interpretations are not important and
countries such as Thailand, India, Malaysia, South Korea etc. can always be
made to enter another treaty or amendment of a treaty as prepared by lawyer=
s
for multinational pharmaceuticals as was done in the case of the Paragraph =
6
Solution of 30 August 2003 subsequently confirmed on 6th December 2005 at H=
ong
Kong which has been interpreted as leading to a ban on the movement of
patented products from one country to another. It is true that the Paragrap=
h 6
Solution of 30th August has introduced tremendous control by pharmaceutical
multinationals on the movement of patented products from one country to
another but that situation exists in the special case of providing medicine=
s
to countries which do not have manufacturing capacity for those drugs. That
situation would not be applicable in the present case of Thailand where
Thailand can obtain medicines under compulsory licenses from any source it
wants. Any manufacture for export would not be affected by the patenting
monopoly as such manufacture would not affect the exploitation of the paten=
t
in the commercial marketplace i.e. the territory where the patented goods f=
or
export are manufactured, of the patent holder (I have discussed this aspect=
 in
my article =93The Paragraph 6 Solution of the Doha Public Health Declaratio=
n and
Export under the TRIPS Agreement, Journal of World Intellectual Property, v=
ol.
7(3) 365-400, 2004).
Coming back to the Wall Street Journal, it made some of the most vituperati=
ve
and demeaning comments against Thailand on the basis of exceptional ignoran=
ce
of law and facts. There is no such thing called technical legality ands
spiritual legality. Thailand has taken an action as a sovereign country wit=
hin
the norms of the international agreements which was imposed on developing
countries by the US-EC trophallaxis basically in 1990-91. In spite of the
fact, that the TRIPS Agreement contains unilateral provisions, Thailand has
followed to  the core the provisions mentioned in Article 31 of the TRIPS
Agreement.
Article 31 reads as under
 =93such use may only be permitted if, prior to such use, the proposed user=
 has
made efforts to obtain authorization from the right holder on reasonable
commercial terms and conditions and that such efforts have not been success=
ful
within a reasonable period of time. This requirement may be waived by a Mem=
ber
in the case of national emergency or other circumstances of extreme urgency=
 or
in case of public non-commercial use. In situations of national emergency o=
r
other circumstances of extreme urgency, the right holder shall, nevertheles=
s,
be notified as soon as reasonable practical. In the case of public
non-commercial use, where the government or contractor, without making a
patent search, knows or has demonstrable grounds to know that a valid paten=
t
is or will be used by or for the government, the right holder shall be
informed promptly;=94
As has been analyzed by you in the context of a propagandist nature of
accusations by PhRMA, Thailand has taken action of issuing compulsory
licensing as per Article 31 of the TRIPS Agreement particularly the provisi=
ons
dealing with public noncommercial use. There is no such word called extreme
urgency or spirit of the TRIPS Agreement. Only spirit of the TRIPS Agreemen=
t
is the spirit of slavery of developing countries who replaced their colonia=
l
masters by their patent masters. Article 31 is not the only provisions
permitting manufacture of patented products by third parties.
There are two other provisions in the TRIPS Agreement, one is Article 27(2)
and the other is Article 5(A)(2) of the Paris Conference incorporated in th=
e
TRIPS Agreement vide Article 2.1 dealing with abuses of patenting monopoly
which would cover not only legality of action by Thailand but that Thailand
would have been in violation of its obligations to international treaty and=
 to
its citizen=92s welfare if it has not issued compulsory license for these f=
our
medicines and possibly many more. Article 27(2) of the TRIPS Agreement says
that =93Members may exclude from patentability inventions, the prevention w=
ithin
their territory of the commercial exploitation of which is necessary to
protect ordre public or morality, including to protect human, animal, or pl=
ant
life or health or to avoid serious prejudice to the environment, =85=94.
It was insisted by Shamnad Basheer (Limiting the Patentability of
pharmaceutical Inventions and Micro-organisms: A TRIPS Compatibility Review=
,
2005} that this provision cannot be read as preventing the patentability of=
 an
invention on the basis that the =93invention is contrary to ordre public or
morality-rather, it is the =91commercial exploitation' of the invention tha=
t is
to contravene ordre public or morality.=94  He has tried to put the emphasi=
s on
commercial exploitation of invention. The actual sentence says =93The preve=
ntion
of commercial exploitation of which is necessary to protect ordre public an=
d
morality.=94 Any invention can be prohibited from patenting if its commerci=
al
exploitation is expected to affect ordre public and morality which basicall=
y
is saying that any invention can be eliminated as a patentable subject matt=
er
if in the opinion of the government of the territory in which it is patente=
d,
the prevention of the commercial exploitation of which is necessary and if =
the
medicines and drugs whose commercial exploitation leads to violation of ord=
re
public and morality, those drugs and medicines  would be non-patentable. A
discussion of the meaning of ordre public and commercial violations would
clarify the matter. While majority of cases dealing with ordre public is in
the realm of private international law, there is actually one significant
judgment in France in the case of ban on dwarf throwing ritual which define=
s
ordre public as maintenance of human dignity. A correct reading of ordre
public as preservation of human dignity as defined by the French court woul=
d
lead to a simple conclusion that commercial exploitation as practiced by so=
me
of the multinational pharmaceutical firms selling 6 baht tablet for 70 baht=
s
which cannot be afforded by sick and poor amounts to violation of human
dignity and thus ordre public. Ordre public is not a public policy. It is m=
uch
more than public policy and its interpretations are dependent on the place =
and
on the time. Ordre public as preserving the human dignity and maintenance o=
f
human life is the most appropriate interpretations of the term (Husserl,
Gerhart (1938) Public Policy and the Ordre Public (1938) Virginia Law Revie=
w,
vol. 25, No. 1, (Nov.) pp. 37-67), Sheppard, Audley and Chance, Clifford
(2004) Public Policy and the Enforcement of Arbitral Awards: Should there b=
e a
Global Standard? Transnational Dispute Management, vol. 1, no. 1, February,
Caulfield, Timothy and Chapman, Audrey (2005) Human dignity as A criterion =
for
Science Policy, PLoS Med 2(8): e244 doi:10.1371/journal.pmed.0020244). The
term ordre public has essentially come from the French civil code Article 6
which says =93Private agreements cannot derogate from laws which affect ord=
re
public and good morales.=94 The term ordre public was also discussed in
connection with the concept of uncertainty in international treaty by the
European Court of Justice which without defining it insisted that since it =
is
common in a number of treaties, it need not be a matter of controversy and
that the concept of ordre public varies from country to country and from on=
e
period to another permitting national authorities an area of discretion
(Netherlands v. European Parliament, 2001 ECR I-07079 (Case -377/98),
Baumgartner, Christoph (2006) Exclusion by inclusion? On Difficulties with
Regard to An effective Ethical Assessment of Patenting in the Field of
Agricultural Bio-Technology, Journal of Agricultural and Environmental Ethi=
cs,
19, pp. 521-539). I have discussed ordre public in connection with the
Argentina-US Mutually Agreed solution through which Argentina had to introd=
uce
patenting of genes and microorganisms in my article Argentina-US Mutually
Agreed Solution, Economic Crisis in Argentina and Failure of the WTO Disput=
e
Settlement system, IDEA: The Journal of Law and Technology, 44(4), pp. 565-=
615
(2004). In fact, commercial exploitation or not, the TRIPS Agreement or not=
,
any law opposed to or in violation of any country=92s ordre public would be=
 void
ab initio in that country.
The term commercial exploitation in Article 27.2 is also reflected in Artic=
le
31 as license for non-commercial purposes where the government does not hav=
e
to consult patent holder before granting compulsory licensing to third part=
ies
as has been done in the case of Thailand. I have discussed the concept of
non-commercial exploitation in connection with the Hee Seob Nam=92s request=
 to
the Korean Patent Office for the issue of compulsory license for Gleevec, t=
he
same medicine for which Novartis has approached Madras High Court (Korea, t=
he
Pharmaceutical Industry and Non-Commercial Use in the TRIPS Agreement,
University of Wollongong working Paper No. 03-15, December 2003). Hee Seob
Nam=92s request was opposed by Jacques Gorlin, who had played a very promin=
ent
role in drafting of the TRIPS Agreement on behalf of the US and the EC
multinationals. Jacques Gorlin in his affidavit had argued that the =91publ=
ic
non-commercial use=92 provision in Article 31 was based on Section 1498 of =
the
USA and as such confined to Defense and Space. IN opposition to Jacques
Gorlin=92 affidavit I had filed the affidavit before the Korean Patent Offi=
ce
but I had told Hee Seob Nam that Jacques Gorlin affidavit had nothing to do
with any legality or norms as it was more of joke but it was to convey
opposition of the US government to the use of compulsory license in Korea a=
nd
the decisions would not be based on any law or rule but it would be a
political decision. Countries like South Korea do not oppose US government.
And that is exactly what happened. Without discussing any of our arguments,
Korean patent Office rejected Hee Seob Nam=92s request. However, coming bac=
k to
the issue of non-commercial use as mentioned in both Article 27.2 and Artic=
le
31, even accepting Jacques Gorlin=92s absurd argument, there is no ban on m=
aking
of profit when the license is transferred to contractors and other supplier=
s
for the use of patenting products or processes. Non-commercial purpose does
not mean non-profit purpose. There would be an element of profit for
contractors.
However, the most important aspect of Thailand=92s compulsory licensing is
Article 5(A)(2) of the Paris Convention which is part of the TRIPS Agreemen=
t
and which deals with the concept of abuse of patenting monopoly. Article 5 =
of
the Paris Convention of the Protection of Industrial Property of March 20,
1883 as amended up to September 28, 1979, deals with importation of Article=
s;
failure to work or Insufficient Working and Compulsory licenses.
Article 5A (1) and Article 5A (2) deals with compulsory licenses and abuse =
of
patent. The provisions are
Article 5 A (1) Importation by the patentee into the country where the pate=
nt
has been granted of articles manufactured in any of the countries of the Un=
ion
shall not entail forfeiture of the patent.
Article 5 A (2) Each country of the Union shall have the right to take
legislative measures providing for the grant of compulsory licenses to prev=
ent
the abuses which might result from the exercise of the exclusive rights
conferred by the patent, for example, failure to work.
Article 5 A (3) Forfeiture of the patent shall not be provided for except i=
n
cases where the grant of compulsory licenses would not have been sufficient=
 to
prevent the said abuses. No proceedings for the forfeiture or revocation of=
 a
patent may be instituted before the expiration of two years from the grant =
of
the first compulsory license.
Article 5 A (4) A compulsory license may not be applied for on the ground o=
f
failure to work or insufficient working before the expiration of a period o=
f
four years from the date of filing of the patent application or three years
from the date of the grant of the patent, whichever period expires last; it
shall be refused if the patentee justifies his inaction by legitimate reaso=
ns.
Such a compulsory license shall be non-exclusive and shall not be transfera=
ble
even in the form of grant of a sub-license, except with that part of the
enterprise or goodwill, which exploits such license.=92
Each and every developing country with the exception of countries forming p=
art
of Bangui Convention (It was removed in the 2nd Bangui Convention at the
instance of the WIPO and Frederick Abbott) have the provisions of local
working where non-working of a patent i.e. the manufacturing of the patente=
d
product in the territory of the patented is regarded as an abuse. AT the sa=
me
time, practically every developing country has introduced three years and f=
our
years waiting period before a compulsory license can be issued. There is
nothing in Article 31 requiring 3 years and 4 years waiting before the issu=
e
of compulsory licensing. Apparently what developing country have done is to
mix Article 5(A)(2) of the Paris Convention with Article 31 of the TRIPS
Agreement. This has been done basically at the instance of the authors such=
 as
Frederick Abbott and Richard Gold (E. Richard Gold and Danial K. Lam (2003)
Balancing Trade in Patents: Public Non-Commercial Use and Compulsory
Licensing, Journal of World Intellectual Property, p.5) who masquerade as
sympathizers of developing countries.
I have discussed the concept of abuse of patenting monopoly in my article
=93Competition Policy and Prevention of Abuses in the TRIPS Agreement=94
(Competition Policy and Prevention of Abuses in the TRIPS Agreement, Rivist=
a
di Politica Economica, September =96October 2005, pp. 207-246). Normally wh=
en we
discuss abuse, it has connotations of abuse in the competition context. Abu=
se
can also arise in any monopolistic context whether it is intellectual prope=
rty
rights  monopoly or any other monopoly. Intellectual property rights abuses
can be dealt with within the confine of the intellectual property laws as
permitted in Article 5(A)(2) of the Paris Convention. The abuse of
intellectual property monopoly can also be dealt with within the context of
competition policy as permitted in the Article 31 of the TRIPS Agreement.
Abuses may range from high prices, to prevention of parallel imports,
discriminatory prices, and even to delaying market entry for generic
competitors as was done in the case of Astrazeneca by the European Competit=
ion
Commission and in the case of Schering Plough by the US Antitrust authoriti=
es
(In the case of Astrazeneca, the EC Competition Commission imposed a fine o=
f
US$ 73 million on Astrazeneca for colluding with the generic manufacturers =
to
bloc the entry of its ulcer drug Losec. In Volvo (1988} ECR 6211, para 9) t=
he
ECJ decided that in the following three types of cases, exercise of exclusi=
ve
rights would be an abusive conduct under Article 86. These are

if the intellectual property right holder =91arbitrarily=92 refuses to deli=
ver
components having industrial property rights to independent repairers;
if it fixes prices for components at an unfair or excessively high level;
if it decides no longer to produce components for a particular model though
many cars of that model are still in use.

The Court of Justice of the European Communities (ECJ) in Volvo AB v. Erik
Veng (Case 238/87, Volvo AB v. Erik Veng (U.K.) Ltd., [1988] E.C.R. 6211,
[1989] 4 C.M.L.R. 122) confirmed that high prices in the case of IPRs are
anticompetitive. Under Article 86(a)(present Article 82(a)), a dominant fir=
m
is prohibited =91directly or indirectly using unfair purchase or selling pr=
ices
or other unfair trading conditions=92. Starting from Sirena v. Eda (Sirena =
v.
Eda [1971] ECR 3169) the ECJ has held that a particularly high price not
related to any objective criteria may be an abuse of dominant position. In
Parke Davis v. Probel ( Parke Davis v. Probel [1968] ECR 55), the European
Court of Justice accepted the scope of high return but it did not suggest t=
hat
right holders in a dominant position can recoup the full value of their
entitlement if the commercial exploitation of the IPR were regulated solely
under national laws. General Motors (General Motors Continental v. Commissi=
on
[1976] ECR 1367 at 1379) and British Leyland (British Leyland v. Commission
[1986] ECR 3263) were two earlier cases inviting the European Court of
Justice=92s ruling that excessive prices charged by a dominant firm would b=
e
violative of Article 86(a).
The South African Competition Act prohibits certain pricing practices
generated by the exclusionary nature of IPR protection. Berger (2003) argue=
d
that the South African Competition Act regulated practices such as charging
=93an excessive price to the detriment of the consumers=94 and engaging in
prohibited price discrimination which is likely to have the effect of
=93substantially preventing or lessening competition.=94 Section 1 of the S=
outh
African Competition Act defines an =93excessive price=94 as =93a price for =
a good or
a service which =96
(aa) bears no reasonable relation to the economic value of that good or
service; and
(bb) is higher than the value referred to in subparagraph (aa).=94
The South African Competition Commission found GlaxoSmithKline and Boehring=
er
Ingelheim behaving anticompetetively over the sale of AIDS drugs in South
Africa and announced that the two pharmaceutical companies were charging
excessive prices for the AIDS. Sirena v. Eda [1971] ECR 3169 at para. 17 (=
=93A
higher price for a trademark product does not per se constitute sufficient
proof of abuse but it may nevertheless become so, in view of its size, if i=
t
does not seem objectively justified=94)
Article 44 of the Argentinean Patent Law in line with the anti-competition
provisions of Article 31 has outlined certain practices as anti-competitive
per se. These are
=93For the purposes of this Law, the following practices among others shall=
 be
considered anti-competitive:
(a)    the setting of prices for the patented products that are excessive i=
n
relation to the market average or discriminatory, particularly where
alternative proposals exist for supplying the market at prices significantl=
y
lower than those charged by the patent owner for the same product;
(b)    refusal to supply the local market on reasonable commercial terms;
(c)    the slowing down of marketing or production activities
(d)    any other act capable of being included among the practices consider=
ed
punishable by Law no. 22.262 (replaced by Law NO. 25.156) or such law as ma=
y
replace it or be substituted for it.
The Argentina-US Solution forced Argentina to introduce intervention of its
Competition Institution before action under any of the four provisions can =
be
taken. Institutions such as the Competition Commission can be used to ident=
ify
abuses but the issue as non-local working, insufficient working or high pri=
ces
can as easily be done by the patenting authorities themselves and action un=
der
patent act can be taken for such abuses. Thus Thailand=92s issue of compuls=
ory
licensing is not only legal under each and every proviso of the TRIPS
Agreement but by opting to pay for royalty which is not required under Arti=
cle
27(2) of the TRIPS Agreement and Article 5(A)(2) of the Paris Convention,
Thailand has introduced an element of litigation which is bound to be
exploited by the pharmaceutical multinationals as has been done in the case=
 of
Novartis where without any issue, an issue of unconstitutionality of Sectio=
n
3(d) of the Indian Patent Act has been created in an attempt to pervert Ind=
ian
judicial system.
Daya Shanker
At 03:48 AM 27/01/2007, B.Baker@neu.edu wrote:

=3D=3D=3DReferences:=3D=3D=3D
  1. http://www.senate.gov/~labor/Hearings/j&n613/dorgan613/rhodes/danz=
on/danzon.htm