WORLD TRADE
ORGANIZATIONIP/C/W/280
12 June 2001
(01-2903)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
COMMUNICATION FROM THE EUROPEAN COMMUNITIES
AND THEIR MEMBER STATES
The following communication, dated 11 June 2001, has been received from the European
Communities and their member States with the request that it be circulated to Members.
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THE RELATIONSHIP BETWEEN THE PROVISIONS OF THE  TRIPS AGREEMENT AND ACCESS TO MEDICINES
BACKGROUND
1. At the last session of the TRIPS Council (2-5 April 2001), the Africa Group proposed that one
day be set aside at the June session to clarify the interpretation and/or application of certain provisions
of the TRIPS Agreement.  The discussion is intended to examine the relationship between intellectual
property and access to medicines and will seek to bring clarity regarding the interpretation and the
application of the provisions of the Agreement which provide scope for Members to address public
health concerns.  The European Communities (EC) and their member States, together with most other
delegations, welcomed and supported this initiative.  It is an important development, since it will be
the first time that the TRIPS Council discusses intellectual property issues in the context of public
health.
2. In view of the urgent need to fight communi cable diseases, the EC and their member States
have already taken a number of initiatives in the area of access to affordable medicines for developing
countries.  On 14 May 2001, the Council of Ministers endorsed the Commission's comprehensive
Programme for Action targeted at the combating of the major communicable diseases.  The Council's
Resolution focuses on three main goals:  maximising  the impact of existing interventions, increasing
the affordability of key pharmaceuticals, and increasing investment in research and development of
specific global public goods.
3. The main objective of EC development policy, as set out in COM (2000) 212 of
26 April 2000, is to foster sustainable development with a view to eradicating poverty in developing
countries and to integrating them into the world economy. It is now clear that certain strategicinterventions, if implemented effectively, have the potential to reduce disease and suffering and
promote prosperity, thereby contributing to a more secure world for all.  However, major
communicable diseases, such as HIV/AIDS, malaria and tuberculosis, continue to act as a brake on
human development.
4. For this reason, the European Commission adopted, in September 2000, a new policy
framework set out in its Communication entitled ‘Accelerated action targeted at major communicable
diseases within the context of poverty reduction’ (COM (2000) 585 of 20 September 2000).  This wasIP/C/W/280
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followed up by a ‘High-level Round Table’  held in Brussels on 28 September 20001, and by a
Resolution of the Council on 10 November 2000 (Doc  13127/00, Annex II), which called on the
Commission to draw up an action plan.
5. The Commission proceeded to develop a Programme for Action on accelerated action on
HIV/AIDS, malaria and tuberculosis in the context of poverty reduction over the next five years. TheProgramme for Action (COM (2001) 96 was adopted by the Commission on 21 February 2001 (see
website http://www.cc.cec:8082/comm/development/sector/social/health_en.htm ).
6. The EC and their member States recognise that the lack of affordable pharmaceuticals is a
serious problem in many developing countries and especially for the poorest people.
RELEVANCE OF INTELLECTUAL PROPERTY7. The EC and their member States consider that intellectual property rights provide an essential
stimulus for creativity and innovation.  These rights need to be adequately protected in order to
encourage, for example, investment in research and development of new medicines, and particularly
those targeted at the major communicable diseases.
8. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which
emerged from the Uruguay Round negotiations has, however, sometimes been criticised as limiting
policy options in relation to public health concerns.  In the view of the EC and their member States,
the Agreement’s objectives, principles and purpose (set out in Articles 7  and 8), special transitional
arrangements and other provisions give these countries a sufficiently wide margin of discretion in
implementing it.  This margin enab les them to set up an intellectual property regime that meets their
policy needs and is capable of responding to public health concerns.  The EC and their member States
have declared their willingness - most notably in the Programme for Action - to promote discussions,
within the WTO, WIPO and WHO, to address the link between the Agreement and public health
protection issues.
This Communication summarises the views of the EC and their member States on some of the
relevant provisions of the Agreement.
COMPULSORY LICENSING
9. In a number of areas, the TRIPS Agreement can be seen as allowing Members a certain
degree of discretion in the manner in which they implement it.  Compulsory licensing (or 'other use
without the authorisation of the right holder') is one such area.
10. Since Article 31 of the Agreement does not specify the grounds on which compulsory
licences may be granted, a number of reasons, inter alia those of public health, may legitimately be
cited.  The Article simply lays down certain proce dural safeguards which have to be respected on
those occasions when such licences are issued: for example, it is required that a voluntary licence be
requested before a compulsory one is issued, and that the patent-holder be paid adequate
remuneration.  It is important to note, though, that the requirement to first try and obtain a voluntarylicence can be waived in the following cases:  i) in a national emergency, or other circumstances of
extreme urgency;  ii) where the subject matter of the patent is required for public non-commercial use.
                                                     
1 The Round Table was convened by the European Commission under the aegis of the French Presidency of the
European Union, and was co-sponsored by WHO and UNAIDS. The pro ceedings may be consulted at
http://europa.eu.int/comm/develo pment/sector/social/health_en.htmIP/C/W/280
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11. However, some have claimed that Article 31 is hedged around with too many procedural
restrictions for it to be of use to developing countries who might wish to resort to compulsory
licensing in order to obtain access to patented medicines at affordable prices.
The EC and their member States consider that procedural safeguards are important to guarantee
legal security.  Article 31 nevertheless leaves some flexibility in cases of national emergency and
other circumstances of extreme urgency, or when th e subject matter of the patent is required for
public non-commercial use.  Although Article 31 does not itself contain tailor-made solutions to
any specific problem raised in the debate on access to health, it does leave WTO Members the
freedom to determine the grounds for granting compulsory licences, provided the terms of the
Article, and of other provisions of the Agreement, are met, and it allows for swift action in case of
emergency or extreme urgency.
12. The lack of any explicit reference to public health is said to make countries wary of using the
Article for fear of provoking expensive litigation.  This has led to calls for a declaration, or perhaps a
recommendation to the General Council, to clarify what phrases such as 'national emergency' and
'public non-commercial use' can be interpreted as referring to.  As for the level of HIV/AIDS infection
reported in some developing countries, there would appear to be very good reasons for describing it asa 'national emergency' or as a 'circumstance of extreme urgency'.
The view of the EC and their member States is that the absence of any explicit reference to public
health in Article 31 does not prevent WTO Memb ers from invoking public health concerns.
Article 7 (‘Objectives’) refers to ‘social and economic welfare’ as an objective of the Agreement
while Article 8 (‘Principles’) allows Members to take measures necessary to protect public health,
provided such measures are consistent with the provisions of the Agreement.   Although Articles 7
and 8 were not drafted as general exception clauses, they are important for interpreting other
provisions of the Agreement, including where measures are taken by Members to meet health
objectives.
13. Article 31 has been further criticised for requiring that goods manufactured under a
compulsory licence be 'predominantly for the supply of the domestic market of the Member
authorising such use.' This provision is sometimes said to prevent a small country that has no
production facilities of its own from obtaining cheap medicines from abroad under a compulsory
licence.  This is an important argument as the Agreement does not appear to offer any legal certainty
on the issue.  What can be said is that a WTO Me mber is free to grant a compulsory licence for the
importation of goods which are under patent in its own territory, as long as the imported goods havebeen  produced in a country where they are not patented, or where the term of protection has expired.
However, the EC and their member States also point to another possible interpretation of the
Agreement (see DG Trade website http://www.cc.cec:8082/comm/trade/pdf/med_lic.pdf ) that would
allow a Member to issue a compulsory licence to a manufacturer in another country, provided the
government of that other country recognised the licence (which it would not be obliged to do under
the Agreement), and provided that all the goods manufactured under the licence were exported to the
country granting the licence.  It should be noted, however, that it is far from certain whether such a
'permissive' reading of the Agreement would sta nd scrutiny by a panel or the Appellate Body.
The EC and their member States are ready to discuss this matter in order to reach consensus on
this issue among all WTO Members.IP/C/W/280
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EXCEPTIONS TO PATENT RIGHTS
14. Article 30 of the TRIPS Agreement ("Exceptions to Rights Conferred") also leaves a certain
degree of discretion to WTO Members as regards its implementation.  It allows for limited exceptions
to the exclusive rights conferred by a patent, provided they are:  1) limited;  2) not unreasonable;  and3) do not prejudice the legitimate interests of the patent holder or of third parties.
The EC and their member States consider that Article 30 amounts to a recognition that the patent
rights contained in Article 28 (‘Rights Conferred’) may need to be adjusted in certain
circumstances.  The provisions of Article 30 should be fully respected, and  be read in the light of
Articles 7 and 8 (referred to above).  They should  not be interpreted as allowing for any substantial
or unjustified curtailment of patent rights.  However, the EC and their member States are not
opposed in principle to exceptions being made, for example, for purposes of research, provided of
course that such exceptions are non-discriminatory.
PROTECTION OF UNDISCLOSED INFORMATION
15. Further clarification of Article 39.3 could also be useful in the context of the debate on access
to drugs.  This provision obliges WTO Members to protect undisclosed test or other data againstunfair commercial use, when those WTO Members re quire submission of such data, the origination of
which involves considerable efforts, as a condition of approving the marketing of pharmaceutical
products.
Indeed, a new medicine normally has to go through a series of safety tests before it is granted
marketing approval.  The question then arises as to whether the resulting test data can be relied on bythe regulatory authority years later when review ing an application for marketing approval for a
generic version of the medicine, thus avoiding th e need for the applicant to submit new data and
speeding up commercialisation of the generic medicine in, for example, developing countries.
The view taken by the EC and their member States is that the Agreement does contain an obligation
to protect test data against ‘unfair commercial use’, and that the most effective method of doing so
is to deny the regulatory authorities the possibility  of relying on such data for a reasonable period
of time.  Furthermore, data protection should be available whether or not the product subject to
regulatory approval is protected by patent or not, since data protection is quite a different issue
from patent protection .
16. Concern has been expressed in some quarter s that such an interpretation could render
compulsory licensing ineffective, because it woul d oblige the licensee to produce its own test data in
order to obtain a separate marketing approval, thereby delaying the arrival of the goods on the market.
The EC and their member States consider, though , that Article 39.3 neither obliges Members to
have marketing approval procedures, nor does it pres cribe what those procedures should be.  The
provision should certainly not be interpreted in such a way as to weaken or nullify Members' rights
under other Articles of the Agreement, such as the ‘fast track’ procedure in case of emergency
foreseen under Article 31(b), which is a recogni tion of the need, in certain circumstances, for
compulsory licences to be given immediate effect .IP/C/W/280
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CONCLUSION
17. The TRIPS Agreement represents a delicate balance between the interests of right-holders and
consumers.  The EC and their member States stand ready to contribute constructively to any debate
concerning the interpretation of its provisions.
18. Moreover, the spiralling health crisis in the developing world has underlined the need for
rapid action.  The TRIPS Agreement has increasingly come under fire for allegedly standing in the
way of developing countries’ efforts to implement an effective public health policy.  The EC and their
member States take such criticisms seriously and stand ready to engage in a positive manner in the
discussion, leading where necessary to clarification, of certain of the Agreement’s provisions.  This
paper has focussed on Articles 7, 8, 30, 31 and 39, but Members may wish to discuss other provisions
they consider to be relevant.  The EC and their member States are also ready to discuss to what extenttechnical assistance can take into account health concerns.
19. Improving health at the same time as combating poverty requires a mix of complementary
social, economic and health policies and practices.  Health gains largely depend on using available
resources in productive and efficient ways, as shown by the great strides made by some middle and
low-income countries.  Intellectual property rights play a role with regard to access to medicines.However, the TRIPS Agreement cannot be held responsible for the health crisis in developing
countries, while it must not stand in the way for action to combat the crisis.  The EC and their member
States will continue to constructively and positively take part in the expanding global effort to develop
a coherent and effective response to the health problems of the developing world.
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