WORLD TRADE
ORGANIZATIONWT/DS170/10
28 February 2001
(01-0981)
CANADA – TERM OF PATENT PROTECTION
Arbitration
under Article 21.3(c) of the
Understanding on Ru les and Procedures
Governing the Settlement of Disputes
Award of the Arbitrator
Claus-Dieter EhlermannWT/DS170/10
Page 1
I. Introduction
1. On 12 October 2000, the Dispute Settlement Body (the "DSB") adopted the Panel Report  1 as
upheld by the Appellate Body Report 2 in  Canada – Term of Patent Protection   ("Canada – Patent
Term ").3  At the DSB meeting of 23 October 2000, Canada informed the DSB, pursuant to
Article 21.3 of the  Understanding on Rules and Procedures Governing the Settlement of Disputes
(the "DSU"), that it would implem ent the recommendations and rulings of the DSB in this dispute and
that it would require a "reasonable period of time" to do so, under the terms of Article 21.3 of theDSU.
2. In view of the impossibility of reaching an agreement with Canada on the period of time
required for the implementation of those recommendations and rulings, the United States requestedthat such period be determined by binding arbitration pursuant to Article 21.3(c) of the DSU.
4
3. By joint letter of 10 January 2001, Canada and the United States notified the DSB that they
had agreed that the duration of the "reasonable period of time" for implementation should be
determined through binding arbitration, under the terms of Article 21.3(c) of the DSU, and that I
should act as Arbitrator.5  The parties also indicated in that letter that they had agreed to extend the
time-period for the arbitration, fixed at 90 days from  the date of adoption of the Panel and Appellate
Body Reports by the DSB, until 28 February 2001.6  Notwithstanding this extension of the time-
period, the parties stated that the arbitration aw ard would be deemed to be an award made under
Article 21.3(c) of the DSU.  My acceptance of this designation as Arbitrator was conveyed to theparties by letter of 11 January 2001.
4. Written submissions were received from Canada and the United States on 22 January 2001,
and an oral hearing was held on 5 February 2001.
                                                     
1WT/DS170/R.
2WT/DS170/AB/R.
3WT/DS170/7, IP/D/17/Add.1.
4WT/DS170/8, IP/D/17/Add.2.
5WT/DS170/9, 10 January 2001.
6Ibid.WT/DS170/10
Page 2
II. Arguments of the Parties
A. Canada
5. Canada requests the Arbitrator to fix the "reasonable period of time" at 14 months and two
days, so that the "reasonable period of time" will expire on 14 December 2001, that is, the last day the
Canadian Parliament is scheduled to sit before its Christmas recess in 2001.
6. Canada submits that compliance will require amending its  Patent Act .7  Past arbitrations have
established that a legislative change is likely to be more time-consuming than an administrativechange.  Canada also submits that, to comply with the WTO ruling in this dispute, it needs to amend
not only Section 45, but also Sections 78.1, 78.2 and 78.5 of its  Patent Act , as well as Section 46 of
the "Old Act", that is, Section 46 as it read before 1 October 1989.
7. Canada notes that there have been relatively few arbitrations to date under Article 21.3(c) of
the DSU in which implementation of the recommendations and rulings of the DSB requiredlegislative change.  In the arbitration award in  Japan – Taxes on Alcoholic Beverages   ("Japan –
Alcoholic Beverages "), the arbitrator referred to the guideline of 15 months in Article 21.3(c) of the
DSU and stated that he had not been persuaded by the particular circumstances cited by the parties, tojustify a departure of the 15-month guideline either way.
8  In  European Communities – Regime for
the Importation, Sale and Distribution of Bananas  ("European Communities – Bananas "), the
arbitrator ruled in a similar manner as in the previous case and awarded the European Communities aperiod of 15 months and five days to implement the recommendations and rulings of the DSB.
9  The
arbitrator did not find any particular circumstances that justified deviation from the guideline.  InEC Measures Concerning Meat and Meat Products  (Hormones)   ("European Communities –
Hormones "), the arbitrator arrived at a similar result and awarded the European Communities 15
months.
10  Again, the arbitrator did not find any circumstances that justified deviation from the
guideline.
8. Canada notes that in  Korea – Taxes on Alcoholic Beverages  ("Korea – Alcoholic
Beverages "), the arbitrator granted Korea 11 months and two weeks.11  According to Canada, Korea
                                                     
7Canadian  Patent Act , R.S.C., 1985, c.P-4, s.45.
8Award of the Arbitrator under Article 21.3(c) of the DSU, WT/DS8/15, WT/DS10/15, WT/DS11/13,
14 February 1997, para. 27.
9Award of the Arbitrator under Article 21.3(c) of the DSU, WT/DS27/15, 7 January 1998, para. 19.
10Award of the Arbitrator under Article 21.3(c) of the DSU, WT/DS26/15, WT/DS48/13, 29 May 1998,
para. 48.
11Award of the Arbitrator under Article 21.3(c) of the DSU, WT/DS75/16, WT/DS84/14, 4 June 1999,
para. 48.WT/DS170/10
Page 3
had claimed a relatively short period for the completion of its legislative process.  The arbitrator
granted Korea the period it had requested to pass the required legislation, but ruled that the requiredregulatory change could be completed at the same time as the legislation.
12  Canada notes that,
according to the arbitrator, "[a]lthough the reasonable period of time should be the shortest period
possible within the legal system of the Member to implement the recommendations and rulings of the
DSB, this [did] not require a Member, in [his] view, to utilize an  extraordinary  legislative procedure,
rather than the  normal   legislative procedure, in every case." 13
9. Canada recalls that in  Chile – Taxes on Alcoholic Beverages  ("Chile – Alcoholic
Beverages "), the arbitrator fixed the "reasonable period of time" at 14 months and nine days.14
According to Canada, the arbitrator recognized th at the management of legislation before it is
introduced in the legislature is important, particularly when the legislation is politically sensitive, andheld that this should be taken into account.
15
10. Canada also submits that in  United States – Section 110(5) of the US Copyright Act
("United States – Section 110(5) ") the arbitrator set the "reasonable period of time" at 12 months,
without explaining his rationale.16  According to Canada, the arbitrator dismissed the relevance of
"controversy", in the sense of domestic "contentiousness", as a relevant consideration in determiningthe "reasonable period of time".  Canada submits that the arbitrator erroneously relied on a statementof the arbitrator in  Canada – Patent Protection of Pharmaceutical Patents   ("Canada –
Pharmaceutical Patents ").
17  In Canada's view, the arbitrator should have taken into account that the
legislative process in a democratic state inevitably involves debate.  Such legislative debate will bemore intense and longer when there are competing legislative approaches for the implementation of
the recommendations and rulings of the DSB.  Canada adds that it is important to emphasize that it is
not so much the "controversy" or the "contentiousness" of the measure as such that should justifyallowing more time than would otherwise be the case, but rather the inherent necessity of providing
                                                     
12Award of the Arbitrator,  Korea – Alcoholic Beverages, supra , footnote 11, para. 46.
13Ibid., para. 42.
14Award of the Arbitrator under Article 21.3(c) of the DSU, WT/DS87/15, WT/DS110/14, 23 May
2000, para. 46.
15Ibid., para. 43.
16Award of the Arbitrator under Article 21.3(c) of the DSU, WT/DS160/12, 15 January 2001, para. 47.
17The arbitrator stated:
I see nothing in Article 21.3 to indicate that the supposed domestic
"contentiousness" of a measure taken to comply with a WTO ruling should inany way be a factor to be considered in determining a "reasonable period of
time" for implementation.
Award of the Arbitrator under Article 21.3(c) of the DSU, WT/DS114/13, 18 August 2000, para. 60.WT/DS170/10
Page 4
adequate time for debate when legislative choices need to be made in a democratic system of
government.
11. Canada further recalls that in the  Canada – Certain Measures Concerning Periodicals
dispute, the United States and Canada agreed on an implementation period of 15 months.18  T h e
legislation was relatively non-complex from a technical point of view, but it was politically
contentious.  The agreement between the parties in that dispute recognized this political reality.
12. Canada justifies its request for an implementation period of 14 months and two days by
reference to its normal legislative process.  In acco rdance with normal procedure, officials of the
Department of Industry have informed the new Minister of Industry (who is responsible for thePatent Act
 ) of the obligations resulting from the recommendations and rulings of the DSB in this
case.  As part of the preparatory process, a draft Memorandum to Cabinet ("MC") is being prepared.The MC is the formal document that sets out the government's policy intent and, upon Cabinetapproval, provides the authority and instructions for the Department of Justice to draft the bill.
13. Canada notes that due to the recent elections in Canada, and the convening of the new
Parliament on 29 January 2001, the timing of consideration of the MC in Cabinet Committee and fullCabinet is uncertain.
19  Once the MC has been approved by the Cabinet, the Department of Justice
will be instructed to complete the drafting of the bill and put it in final form.  It is expected that once
Cabinet has given its policy approval, the finalization of the drafting of the bill will takeapproximately one month.  Once the drafting of the bill has been completed, the Government HouseLeader will review the bill, determine its priority in the government's legislative calendar, and reportback to Cabinet so as to seek the delegated authority of the full Cabinet to schedule the introduction of
the bill.
20
14. According to Canada, the setting of the legislative agenda is the prerogative of the
Government House Leader.  This will have an impact on the priority that can be given to theintroduction of new business, and when such new business can be included in the schedule of theHouse of Commons for debate.  Canada outlines the legislative process in Canada as follows.  Thefirst stage is the introduction, and the first reading of the bill in Parliament.  At this stage, the Ministerof Industry will inform the House of his intention to proceed with the tabling of the bill.  The purpose
                                                     
18Pursuant to Article 21.3(b) of the DSU.  See Canada's statement at the DSB meeting of 25 September
1997, WT/DSB/M37, 4 November 1997.
19In response to questioning from the Arbitrator, Canada clarified that the MC would be considered by
the Cabinet Committee during the week of the oral hearing.
20At the oral hearing, Canada declared that the Government of Canada's aim is to introduce the bill for
the first reading in early March 2001.WT/DS170/10
Page 5
of the first reading is for the bill to be introduced so that it can be printed and distributed to all
Members of the House.  During the second reading, Members debate and vote on the principle of thebill.  The bill is then referred to Committee.  The Committee undertakes a clause-by-clause reviewand study of the bill.  The timetable associated with consideration of the bill by the Committee is
difficult to predict, and depends on the number of witnesses and experts that are summoned or
interested in testifying.  Once the bill has been approved, including any amendments, the Committeerefers the bill to the House clearly indicating any amendments proposed.
15. The full House considers any amendments and votes for or against them.  If amendments to
the bill are made, the bill must be re-drafted and reviewed by the Legislation Section of theDepartment of Justice.  The bill can then be scheduled for a third reading.  During the third reading,the Members debate and vote on the bill as amended.  Although unusual, it is possible foramendments to be introduced at this stage.  Once the bill has gone through a third reading in theHouse, it will be sent to the Senate for consideration.
16. Consideration of the bill in the Senate follows a similar process to that of the House, including
the first reading, second reading, consideration in Committee, and third reading.  The Senate maypropose amendments to the bill, which will then have to be sent back and considered by the House ofCommons.
17. Following passage by both the House of Commons and the Senate, the bill is prepared for the
Governor General for Royal Assent.  Generally, an act will come into force on the date on which itreceives Royal Assent unless another date of entry into force is specified in the statute, or the datemay be left by the statute to be determined by order of the Governor-in-Council.
18. Canada explains that the House of Commons is scheduled to sit for 135 days in 2001.  Of the
135 scheduled sitting days, certain days are allotted for certain specific debates and other emergencyand special debates, leaving a maximum of 104 days for government business.  Of the 80 sitting daysbetween February and June 2001, five days are reserved for specific debates.  This leaves a maximumof 61 days for consideration of legislative business during this period.  The bill would likely be incommittee phase when the House adjourns for its summer recess.  Unlike the House, the Senate doesnot have a set calendar.
19. Canada submits that the required amendment to its  Patent Act  will have an impact on
Canada's health care system.  Therefore, it can be expected that there will be significant debate on the
amendments that the government will propose.  The debate, which is likely to be divisive, will affect
the amount of time required by Parliament to process the legislative proposal.  Any attempt by thegovernment to use extraordinary procedures to limit debate could cause political reactionsWT/DS170/10
Page 6
jeopardizing the chances of early enactment of th e legislation and may result in more time being
required to complete the legislative process than would otherwise be the case.  Therefore, thegovernment will have to carefully manage the legislative process and engage in consultations withstakeholders and the provinces, both before and during the debate in Parliament.
B. The United States
20. The United States asks the Arbitrator to determine that the "reasonable period of time" is six
months from the date of the adoption of the Panel and Appellate Body Reports by the DSB in thisdispute.
21. The United States submits that if Canada is permitted to delay its implementation of the
recommendations and rulings of the DSB in this disput e, thousands of patents will continue to expire
"prematurely", causing irreparable harm to patent owners that are United States nationals.  For theUnited States, this is an issue of extreme urgency "in which every day counts".
21  According to the
United States, on average, 1,149 patents will "prematurely" fall into the public domain every month of
2001.
22. The United States agrees that a legislative amendment is the most appropriate means of
implementing the recommendations and rulings of th e DSB.  The United States is not, however,
persuaded by the implementation schedule proposed by Canada.  The United States considers that thisimplementation schedule does not properly reflect the objective of prompt compliance, nor does ittake sufficient account of the flexibility Canada has in its parliamentary system.
23. The United States submits that the awards issued in previous arbitrations have made it clear
that the "reasonable period of time" determination shall be based on the shortest period possible
within the legal system of the Member to impl ement the recommendations and rulings of the DSB.
The clearest guidance for any arbitrator in making this determination is the text of Article 21.3(c),which provides that the "reasonable period of time" should not exceed 15 months from the date of theadoption of a panel or Appellate Body report.  However, that time may be shorter or longer,depending upon the particular circumstances.
24. The United States argues that the context of Article 21.3(c) makes clear the overriding
purpose of prompt compliance.  Not only does this Article emphasize that a "reasonable period oftime" is available only "[i]f it is impracticable to comply immediately with the recommendations andrulings", but Article 21.1 affirms that "[p]rompt compliance with recommendations and rulings of the
DSB is essential in order to ensure effective resolution of disputes to the benefit of all Members".
                                                     
21United States' submission, para. 3.WT/DS170/10
Page 7
Similarly, Article 3.3 of the DSU cites the "prompt settlement" of disputes as "essential to the
effective functioning of the WTO and the maintenance of a proper balance between the rights andobligations of Members".
25. Referring to the award in  Canada – Pharmaceutical Patents , the United States submits that
Canada carries the burden of establishing that the "reasonable period of time" it seeks is in fact the
shortest period possible for compliance within its legal system.
22
26. According to the United States, while "particular circumstances" considered in previous
arbitrations include the form of implementation, the complexity of the steps necessary forimplementation, the legally binding nature of thes e steps for implementation and their timing, the
existence of domestic controversy or "contentiousness" is not a relevant factor.
23
27. The United States asserts that an examination of the form of Canada's implementation, the
lack of complexity in the steps involved in that  implementation, and the discretion built into Canada's
parliamentary system shows that the shortest period of time possible for implementation under
Canada's legal system is six months from the date the recommendations and rulings of the DSB were
adopted.
28. The United States submits that the bureaucratic process of drafting the bill and obtaining
Cabinet approval under the Canadian parliamentary system is highly flexible, and can be completedquickly if desired or necessary.  The United States is of the view that even approval through Cabinetcommittees and the full Cabinet can be, and often is, expedited.  There are no mandatory proceduralrules or time requirements for such a process.
29. According to the United States, to ensure that all patents filed before 1 October 1989 obtain
the term of at least 20 years from the date of filing, as established by the  Agreement on Trade-Related
Aspects of Intellectual Property Rights   (the " TRIPS Agreement
 "), requires only a simple, narrow
amendment of Section 45 of Canada's  Patent Act .  Furthermore, any conforming amendments to
other sections of this Act, if they are required, can only be technical and non-substantive in nature.24
Thus as, an amendment to Section 45 would be narrow, any conforming amendment must also be
narrow.
                                                     
22Award of the Arbitrator, supra , footnote 17, para. 47.
23Ibid., para. 60.
24At the oral hearing, the United States stated that while a technical correction to Section 78.1 of
Canada's  Patent Act  might be needed, it would appear that no additional changes to the  Patent Act  will be
necessary.WT/DS170/10
Page 8
30. The United States contends that the process for approving a legislative amendment at the
Cabinet level prior to its submission to the Parliament is neither complicated nor time-consuming.The Cabinet and its Committee typically meets weekly.  Cabinet consideration is often  pro forma
after a proposal has been approved through Committee.  As the required amendment to Canada's
Patent Act   is straightforward and is merely conforming Canada's law to an obligation under the
TRIPS Agreement   that Canada has already assumed, there is no policy issue to debate and no
complexities in terms of legal drafting.
31. The United States submits that Canada has a parliamentary system, which means the
government with its parliamentary majority can effectively ensure that whatever legislation it wants topass will be passed in as short a time-period as it likes.  Thus, if Canada is committed to passing thebill promptly, there is ample scope to do so using the legislative steps outlined by Canada, particularlygiven the controlling majority of the Liberal Party in the Parliament following the recent election, and
the fact that the legislative procedural rules only require an average of one mandatory sitting day each
for the first reading, the second reading, the co mmittee stage, and the report stage and third reading
taken together.
32. The United States asserts, as past practice illustrates, many bills have been swiftly passed by
this government.  For instance, in the 36th Parlia ment (1997-2000), of the 78 government bills that
received Royal Assent, 40 were passed in four months or less.  Indeed, bills have been enacted in asshort a time-period as one week.
33. According to the United States, with Canada's ability to promptly pass legislation, the
underlying question is whether Canada will make the passage of the bill a priority in its legislative
agenda.  For the United States, the answer must be a resounding "yes".  Canada must make the
compliance of its obligations under the  TRIPS Agreement   a priority in its legislative proceedings.
34. The United States concludes that there are no compelling reasons why Canada needs more
than six months to implement the recommendations and rulings of the DSB in this case.
III. "Reasonable Period of Time"
35. Canada has said that it will comply with the recommendations and rulings of the DSB in
Canada – Patent Term , but has requested a "reasonable period of time" under Article 21.3 of the DSU
in which to do so.
25  As the duration of the "reasonable period of time" in this case has not been
                                                     
25Canada's statement at the DSB meeting of 23 October 2000.  See, supra , para. 1.WT/DS170/10
Page 9
agreed by the parties, they have requested that I determine this period of time through binding
arbitration under Article 21.3(c) of the DSU.26
36. Article 21.3(c) of the DSU provides that when the "reasonable period of time" is determined
through arbitration:
… a guideline for the arbitrator should be that the reasonable period of
time to implement panel or Appellate Body recommendations should
not exceed 15 months from the date of adoption of a panel or
Appellate Body report.  However, that time may be shorter or longer,
depending upon the particular circumstances.
Thus, when the "reasonable period of time" is determined through arbitration, the guideline for the
arbitrator is that this period should not exceed 15 months from the date of adoption of the panel reportand/or the Appellate Body report.  This does not mea n, however, that the arbitrator is obliged to grant
15 months in all cases.  Article 21.3(c) makes clear that the "reasonable period of time" may beshorter or longer, depending upon the "particular circumstances".  The applicable "particularcircumstances" thus influence the determination of what is a "reasonable period of time" forimplementation, as has been stated by previous arbitrators.
27
37. The meaning of Article 21.3(c) is elucidated by its context.  This context includes the
introductory language of Article 21.3, which recognizes that the question of a "reasonable period of
time" for implementation only comes into play if "it is impracticable to comply immediately";  Article21.1, which stresses that "[p]rompt compliance … is essential in order to ensure effective resolutionof disputes to the benefit of all Members";  and Article 3.3, which also recognizes that the "promptsettlement of situations … is essential to the effective functioning of the WTO and the maintenance ofa proper balance between the rights and obligations of Members."
38. Thus, the DSU explicitly emphasizes the importance of "prompt" compliance.  In
recognition of this principle, previous arbitrators have established that the most important factor inestablishing the length of the "reasonable period of time" is the following:
                                                     
26WT/DS170/9, 10 January 2001.
27See, for example, Award of the Arbitrator, Chile – Alcoholic Beverages , supra , footnote 14,
paras. 39, 41-45;  Award of the Arbitrator under Article 21.3(c) of the DSU, Canada – Certain Measures
Affecting the Automotive Industry   ("Canada – Automotive Industry "), WT/DS139/12, WT/DS142/12, 4 October
2000, para. 39;  and Award of the Arbitrator, Canada – Pharmaceutical Patents , supra , footnote 17, para. 48.WT/DS170/10
Page 10
… it is clear that the reasonable period of time, as determined under
Article 21.3(c), should be the  shortest period possible within the legal
system of the Member   to implement the recommendations and rulings
of the DSB.  28 (emphasis added)
39. Although the "reasonable period of time" should be the "shortest period possible within the
legal system of the Member" this does not require a Member to utilize an " extraordinary  legislative
procedure" in every case.29
40. I now turn to an examination of the arguments made by Canada and the United States in order
to determine what would be a "reasonable period of time" in the "particular circumstances" of thisdispute.
41. At the outset, I note that the parties agree that  the means of implementation in this dispute is
legislative, rather than administrative.  I recall the statement of a past arbitrator that a legislative
change is likely, absent evidence to the contrary, to be more time-consuming than an administrativechange.
30
42. Canada proposes that I set the "reasonable period of time" at 14 months and two days from
the date of adoption of the Panel and Appellate Body Reports by the DSB, so that the "reasonableperiod of time" will expire on 14 December 2001, that is, the last day the Parliament of Canada isscheduled to sit before its Christmas recess in 2001.  Canada justifies this request by reference to itsusual legislative process.  In support of its position, Canada invokes two factors:  the limited numberof available sitting days of the House of Commons;  and the character of the debate, which is likely to
be "divisive".
31  According to Canada, any attempt by the government to use extraordinary procedures
to limit debate could cause political reactions jeopardizing the chances of early enactment of thelegislation.  Therefore, the Government of Canada will have to manage carefully the legislativeprocess and engage in consultations with stakeholders and the provinces, both before and during thedebate in Parliament.
                                                     
28Award of the Arbitrator, European Communities – Hormones , supra , footnote 10, para. 26;  quoted
with approval in Award of the Arbitrator,  Korea – Alcoholic Beverages , supra , footnote 11, para. 37.  See, also,
Award of the Arbitrator under Article 21.3(c) of the DSU, Indonesia – Certain Measures Affecting the
Automobile Industry , WT/DS54/15, WT/DS55/14, WT/DS59/13,  WT/DS64/12, 7 December 1998, para. 22;
and Award of the Arbitrator, Canada – Pharmaceutical Patents , supra , footnote 17, para. 47.
29Award of the Arbitrator, Korea – Alcoholic Beverages , supra , footnote 11, para. 42.  See, also, Award
of the Arbitrator, United States – Section 110(5), supra, footnote 16, para. 32.
30Award of the Arbitrator,  Canada – Pharmaceutical Patents , supra , footnote 17, para. 49, quoted with
approval by the arbitrator in  United States – Section 110(5) , supra , footnote 16, para. 34.
31Canada's submission, paras. 29 and 32.WT/DS170/10
Page 11
43. The United States requests that I set the "reasonable period of time" at six months from the
date of adoption of the Panel and Appellate Body  Reports by the DSB.  According to the United
States, the process of drafting a bill, gaining Cabinet approval and passing legislation is highlydiscretionary and can be completed quickly;  Canada has a parliamentary system in which the
government with its parliamentary majority can ensure that legislation will be passed in as short a
time as it likes.  The United States considers that Canada must make compliance with its obligationsunder the  TRIPS Agreement  a priority in the legislative proceedings.
44. Before I turn to the essence of this dispute, it is useful to first address two points on which the
parties generally agree.  The first concerns the "complexity", or rather the absence of "complexity", ofthe implementing measure in this case.  In two previous arbitration awards, it has been expresslyrecognized that the complexity of the proposed implementation can be one of the "particularcircumstances" which may influence the length of the "reasonable period of time".
32
45. The parties in this dispute hold different views on the exact number of provisions of the
Canadian  Patent Act  which need to be amended.33  The parties do agree, however, on the nature of
these amendments.  In response to questioning at the oral hearing, Canada accepted that the proposedbill addresses narrow technical issues.  Thus, Canada recognizes that its request for a "reasonableperiod of time" of 14 months and two days is not justified by the "complexity" of the envisagedimplementing legislation.  Canada, rather, seems to admit the position of the United States that therequired legislative change is "simple".
34
46. A second point of convergence between the parties concerns the significance, under
Article 21.3(c) of the DSU, of the economic consequences of the expiry of certain patents during the
"reasonable period of time" for the implementation of the recommendations and rulings of the DSB.  I
recall the United States' assertion that, if Canada is permitted to delay its implementation of the
                                                     
32Award of the Arbitrator, Canada – Pharmaceutical Patents , supra  footnote 17, para 50.  See, also,
Award of the Arbitrator, European Communities – Bananas , supra , footnote 9, para. 19.
33According to Canada, the amendment of Section 45 of its  Patent Act  entails not only an amendment
of Section 78.1 of the same Act but also an amendment of Sections 78.2 and 78.5 of its  Patent Act , and Section
46 of the "Old Act", that is, Section 46 as it read befo re October 1989.  According to the United States, the
amendment of Sections 78.2 and 78.5 of Canada's  Patent Act  and of Section 46 of the "Old Act" appear not to
be necessary.
In order to avoid any misunderstandings, I would like to stress that I am mindful of the limits of my
mandate in this arbitration which relates exclusively to determining the "reasonable period of time" forimplementation under Article 21.3(c).  See, Award of the Arbitrator, European Communities – Hormones ,
supra , footnote 10, para. 38;  Award of the Arbitrator under Article 21.3(c) of the DSU, Australia – Measures
Affecting Importation of Salmon , WT/DS18/9, 23 February 1999, para. 35;  Award of the Arbitrator, Korea –
Alcoholic Beverages , supra , footnote 11, para. 45;  and Award of the Arbitrator, Canada – Pharmaceutical
Patents , supra , footnote 17, paras. 40 – 43.
34United States' submission, paras. 15 and 19.WT/DS170/10
Page 12
recommendations and rulings of the DSB, thousands of patents will continue to expire "prematurely",
causing irreparable harm to patent owners;  on average, 1,149 patents will fall into the public domaineach month during 2001.
35
47. At the oral hearing, Canada accepted the statistics presented by the United States, but
submitted that they are misleading as they fail to indicate whether or not the "prematurely" expiring
patents have any commercial significance.  According to Canada, "in the period between 2001 and2009, where the last of the 53,500 term-deficient patents will expire, there are only 34 patents whichboth fall into the class of affected patents and the class of those known to have some currentcommercial value."  "[B]etween now and December 2001, only 12 of these patents which havecommercial value will expire".
36  The United States disagreed with this assertion made by Canada.
48. Canada advanced the argument about the small number of patents with commercial value for
the first time at the oral hearing.  It is obvious that this argument would raise a major proceduralproblem if the commercial value of the patents expiring during the "reasonable period of time" had
any relevance as a "particular circumstance" for th e determination of the length of the "reasonable
period of time" in this case.  However, in my view, this is not so.  Measures taken by Members, whichare inconsistent with one of the covered agreements will, naturally, or at least very often, causeirreparable harm to economic operators who are nationals of other Members.  In this respect,violations of the  TRIPS Agreement  will generally not differ from violations of one of the other
covered agreements.  The precise assessment of damage caused to a group of economic operators orto single individuals, or companies, may well be more difficult to evaluate than in the present case.However, this does not distinguish the present case from other cases involving violations of covered
agreements for the purposes of determining the "reasonable period of time", under Article 21.3(c).  I
note that this view corresponds to the position taken by the United States at the oral hearing accordingto which the argument of urgency was raised to provide context.  The United States acknowledgedthat the commercial value of the expiring patents is  not relevant to the determination of the shortest
period possible, within the Canadian legal system.
49. I now turn to Canada's main argument in support of its request for a "reasonable period of
time" of 14 months and two days.  I recall Canada's observation that the required amendment of itsPatent Act  will have an economic impact on Canada's health care system, so that it can be expected
that there will be significant debate which is likely to be divisive, and that, therefore, the Government
                                                     
35United States' submission, para. 3.
36Canada's opening statement at the oral hearing, paras. 12 and 14.WT/DS170/10
Page 13
of Canada will have to carefully manage the legislative process.  In support of its argument, Canada
refers to the arbitration award in  Chile – Alcoholic Beverages.37
50. The United States considers that previous arbitration awards have made clear that the
existence of domestic controversy, or the "contentiousness" of proposed implementation, is not a
relevant factor in determining a "reasonable period of time".  The United States refers to the
arbitration award in Canada - Pharmaceutical Patents , in which the Arbitrator said:
I see nothing in Article 21.3 to indicate that the supposed domestic
"contentiousness" of a measure taken to comply with a WTO ruling
should in any way be a factor to be considered in determining a"reasonable period of time" for implementation.  All WTO disputes
are "contentious" domestically at least to some extent; if they were
not, there would be no need for recourse by WTO Members to dispute
settlement.
38
51. The United States also refers to the award in  United States – Section 110(5) , in which the
arbitrator, quoting from the earlier award in  Canada – Pharmaceutical Patents , said that:
… any argument as to the "controversy", in the sense of domestic
"contentiousness", regarding the measure at issue is not relevant.39
52. Canada considers that the arbitrator in the latter case ignored the fact that the
Canada - Pharmaceutical Patents  award concerned implementation by  administrative  promulgation
of an  executive  regulation while the arbitration in  United States – Section 110(5)  concerned
implementation by  legislative  means.  According to Canada, the arbitrator in the latter case should
have taken into account that the legislative process in a democratic state inevitably involves debate.Such legislative debate will be more intense and last longer where there are competing legislativeapproaches for the implementation of the recommendations and rulings of the DSB.
53. The issue raised by Canada is of great importance, both from the point of view of the
implementation of recommendations and rulings of the DSB, that is, the respect of international treaty
obligations, and from the point of view of fundamental principles of the democratic process.  I do notbelieve, however, that I have to decide the controversy between the parties for the implementationthrough legislation in general.  My only task is to determine the "reasonable period of time" for thecase before me.  My reasoning, therefore, applies to this case only.
                                                     
37Award of the Arbitrator, Chile – Alcoholic Beverages , supra , footnote 14, para. 43.
38Award of the Arbitrator, Canada – Pharmaceutical Patents, supra , footnote 17, para. 60.
39Award of the Arbitrator, United States – Section 110(5) , supra , footnote 16, para. 42.WT/DS170/10
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54. I recall that Canada is obliged to bring Section 45 of its  Patent Act  into conformity with its
obligations under Article 33 of the  TRIPS Agreement   which states that "[t]he term of protection
available shall not end before the expiration of a period of twenty years counted from the filing date".Article 33 prescribes a precise result.  It defines the earliest date on which the term of a patent may
end.
40  Canada may establish a longer period before a patent expires, if it so wishes.  However,
Canada is not allowed to provide for a period of patent protection shorter than 20 years counted fromthe filing date.
55. In prescribing a precise result, that is, the duration of the minimum period of patent
protection, Article 33 of the  TRIPS Agreement  is quite different from provisions which limit only
marginally the discretion of the legislator, such as prohibitions of discrimination between importedand domestic goods or services.   Such discrimination can, of course, be eliminated in several ways,while a violation of Article 33 of the  TRIPS Agreement  can only be remedied through one action,
that is, by providing for the required minimum period of patent protection.
56. Thus, with respect to the minimum period of patent protection, Article 33 of the
TRIPS Agreement  leaves no room for any legislative discretion or legislative choices.  In amending
its  Patent Act , Canada has to ensure that the term of patent protection does not end before the
expiration of 20 years counted from the date of filing.
57. Canada cannot, and does not, contest this reasoning.   Canada's argument relates, in reality, to
"competing legislative choices" that are outside the strict boundaries of the implementation of therecommendations and rulings of the DSB in this case.  In particular, Canada has mentioned the viewof the Canadian Drug Manufacturers Association, that is, the generic segment of Canada's
pharmaceutical industry, that "if the patent term is amended to 20 years from application, it must
apply to all patents."
 41
58. The treatment of existing patents which benefit from a longer period of protection than the
period prescribed by Article 33 of the  TRIPS Agreement  may be highly controversial and closely
connected politically with the amendment of Article 45 of the Canadian  Patent Act .  However, as I
have already said, this issue is outside the strict boundaries of the implementation of therecommendations and rulings of the DSB.  Consequently, the "contentiousness" of this issue iscertainly not a "particular circumstance" which I should take into account in determining the                                                     
40Report of the Appellate Body, Canada – Patent Term , supra , footnote 2, para 85.
41Canada offered this explanation at the oral hearing, see Canada's opening statement, para. 32.  In
response to questioning by the Arbitrator, Canada explained that, according to the Canadian Drug
Manufacturers Association, an extension of the existing period of patent protection (to 20 years from the filing
date, as required by Article 33 of the  TRIPS Agreement ) should be accompanied by a reduction of the period of
protection of  all  existing patents to exactly the same period of 20 years.WT/DS170/10
Page 15
"reasonable period of time" in the present case.  Therefore, Canada cannot invoke legislative choices
and the likely divisiveness of the debate in the Canadian Parliament to justify its request for a"reasonable period of time" of 14 months and two days.
59. While Canada invokes the controversial character of any amendment to its  Patent Act  which
will have an impact on the Canadian health care system, the United States emphasizes that under
Canada's parliamentary system, the Government of Canada controls the majority in both Houses ofParliament, the House of Commons and the Senate.  According to the United States, with thismajority, the government controls the legislative process, and sets the timetable for both Houses ofParliament from start to finish;  the Government of Canada can essentially pass any legislation itwishes in whatever time it likes.
60. It may well be possible that Canada's political system and the actual distribution of seats
among the political parties in Canada's Parliament facilitate the passage of legislative initiatives takenby the present Canadian government.  I am, however, very reluctant to take these factors into account
in determining the "reasonable period of time".  These factors vary from country to country, and from
constitution to constitution.  Even within a given country, they will change over time.  In addition,their evaluation will often be difficult and highly speculative.  I also note that such factors have neverbeen considered as "particular circumstances" in an y of the earlier awards under Article 21.3 (c) of the
DSU.  Thus, the political factors mentioned in the preceding paragraph, and invoked by the UnitedStates in support of its request for a "reasonable period of time" of six months, are not relevant to mytask.
61. Having examined these arguments advanced by Canada and the United States, I now turn to
the evaluation of the requested "reasonable period of time" in the light of Canada's normal legislative
process.
62. Contrary to other cases,
42 I do not believe that it is necessary to examine the pre-legislative
phase of Canada's law making process, as it is likely that this phase will be practically completed bythe time that this award is made public.  Canada has said that, anticipating the comments made by thearbitrator in  United States – Section 110(5) , it has made good use of the period following the
                                                     
42See, in particular, Award of the Arbitrator, Chile - Alcoholic Beverages, supra,  footnote 14, para. 43.WT/DS170/10
Page 16
adoption of the panel and Appellate Body Reports by the DSB.43  At the oral hearing, Canada
indicated that the government's aim is to introduce the bill for the first reading in early March.
63. Canada has described, in detail, in its written submission the different steps of the legislative
phase of its law making process.  The passage of legislation requires, in essence, three readings in
both Houses of the Canadian Parliament, that is, the House of Commons and the Senate.  The process
includes an examination of the proposed legislation by committees, which normally takes placebetween the second and the third reading.  Once the House of Commons has considered the bill, it issent to the Senate for its consideration.  After approval by the Senate, the bill is given Royal Assentby the Governor-General.  The different steps in this process and their sequence are clearly structuredand defined.  With respect to timing and scheduling, however, the process is flexible, as Canadaacknowledged at the oral hearing.  Use of this flexibility does not require recourse to extraordinaryprocedures.
44  Following earlier arbitration awards, I consider this flexibility to be an important
element in establishing the "reasonable period of time".45
64. Ultimately, the "reasonable period of time" appears to be a function of the priority which
Canada attributes to the amendment of its  Patent Act  in order to bring it into conformity with its
obligations under Article 33 of the  TRIPS Agreement .  I recognize that in all democratic societies,
legislative initiatives designed to satisfy different needs and wishes compete with each other.  I share,however, the view expressed in a recent arbitra tion award concerning another Member, which I adopt
only to the extent that it fits the present case concerning Canada;  it seems to me that this is the type ofmatter for which the Canadian Parliament should try to comply with the international obligations ofCanada as soon as possible, taking advantage of the flexibility that it has in its normal legislative
procedures.
46
                                                     
43In this award, the arbitrator said:
Arbitrators will scrutinize very carefully the actions an implementing
Member takes in respect of implementation during the period after adoption
of a panel and/or Appellate Body report and prior to any arbitration
proceeding. If it is perceived by an arbitrator that an implementing Member
has not adequately begun implementation after adoption so as to effect"prompt compliance", it is to be expected that the arbitrator will take this intoaccount in determining the "reasonable period of time".
See, Award of the Arbitrator, United States – Section 110(5), supra,  footnote 16, para. 46.
44I recall that, although the " 'reasonable period of time' should be the 'shortest period possible within
the legal system of the Member', this does not require a Member to utilize an ' extraordinary  legislative
procedure' in every case."  See, supra , para. 39 and footnote 29.
45See, Award of the Arbitrator, United States – Section 110(5), supra , footnote 16, for legislative
action.  See, also, Award of the Arbitrator,  Canada – Automotive Industry, supra , footnote 27, para. 47 and 48,
for regulatory action.
46Award of the Arbitrator, United States – Section 110(5), supra,  footnote 16, para. 39.WT/DS170/10
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65. Canada justifies its request for a "reasonable period of time" of 14 months and two days on
the basis that the fall session of the Canadian Parliament ends on 14 December 2001.  I consider that,in the circumstances of this case, the inclusion of the fall session of the Canadian Parliament is notjustified.  Turning to the position of the United States, I note that the end of an implementing period
of six months would fall in the middle of the spri ng session of the Canadian House of Commons, that
is, 12 April 2001.  However, this period seems to me to be unreasonably short.
66. I note that the last sitting day, actually foreseen by the Canadian House of Commons
calendar, before the summer recess is 22 June 2001.  However, establishing the "reasonable period oftime" so that it ends on this day does not seem to me to be appropriate.  Fixing the "reasonable periodof time" to coincide with a date which is not determined by constitution or by statute, but which caneasily be modified, would give the actual calendar of the House of Commons a legal value andsignificance that it simply does not have.  In additi on, I note that the bill must also pass the Senate and
be given Royal Assent.  I, therefore, determine the "reasonable period of time" independently of the
date actually foreseen by the Canadian House of Commons calendar for the beginning of the summer
recess of the House of Commons.
IV. The Award
67. For all the above reasons, I determine that the "reasonable period of time" for Canada to
implement the recommendations and rulings of the DSB is  10 months  from the date of adoption of
the Panel and Appellate Body Reports by the DSB on 12 October 2000.  The "reasonable period of
time" will, thus, expire on 12 August 2001.
Signed in the original at Geneva this 19th day of February 2001 by:
                                                    
Claus-Dieter Ehlermann
Arbitrator