Trade Policy Note Final-rev08 - Development

It is now incumbent on developing countries to ratify this Amendment, and to draw
up legislation to govern compulsory licensing. Such legislation may also require
provisions to ensure the admissibility of parallel imports. However, such legislation is
only part of the comprehensive approach required to ensure that public health
objectives can be met within the framework of TRIPS. 85
Competition
The need for the acceptance of parallel imports and the use of compulsory licensing
are not confined to the health sector, although this is where they are most urgently
needed. Both mechanisms can be used to ensure that patents are not abused for anticompetitive
purposes. Under the principle of the “exhaustion” of IPRs, once a patent
holder has placed patented goods on the market or allowed a licensee to market, the
patent holder has no right to control the resale of such goods, i.e. “parallel” imports
are permitted. 86 The TRIPS Agreement, however, leaves WTO members to decide
whether or not to incorporate this provision into their legislation. Developing country
governments should draw up legislation confirming the admissibility of parallel
imports. This will avoid patent holders imposing high pric es on the domestic markets
for essential goods that are available, under the same patent, at lower prices in other
countries. At the same time, compulsory licensing legislation should be drawn up to
ensure that patents are not used to block further innovation by competitors. A desire to
acquire control over the patents of competitors has been one of the motives behind the
dramatic increase of mergers and acquisitions resulting in a high level of
concentration in many developing country markets.
Genetic resources, agriculture and bio-piracy
The TRIPS Agreement permits members to exclude plants and animals other than
“micro-organisms” from patentability. Plant varieties must be protected, but members
are free to accomplish this by effective sui generis systems 87 . These provisions are
currently under review by the WTO TRIPS Council. 88 .
One major concern is that the patenting of plants and plant varieties can lead to
situations where farmers become dependent on industrial suppliers for vital inputs
such as seeds. 89 This has prompted a number of developing countries to pass
legislation to exclude the patenting of all genetic materials. These countries have met
their obligation to protect plant varieties through sui generis legislation, usually based
on a “breeder’s rights” system which allows farmers the possibility of saving and
replanting seeds, and the right to use a protected variety as a source for further
85 See Carlos Correa, Integrating Public Health Concerns into Patent Legislation in Developing
Countries, South Centre (Geneva, 2000) (www.southcentre.org).
86 See Carlos Correa, Intellectual Property Rights, the WTO and Developing Countries, (Zed book,
New York, 2000 ).
87 See “Beyond UPOV - Examples of countries preparing non-UPOV sui generis plant variety
protection systems for compliance with TRIPs”, GRAIN briefings 1999
(http://www.grain.org/briefings/?id=127).
88 As provided in TRIPs Article 27:3(b).
89 See Vandana Shiva and Radha Hola-Bhar, Piracy by Patent; the case of the Neem Tree, quoted in
Correa op.cit.
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