WORLD TRADE
ORGANIZATIONWT/DS170/R
5 May 2000
(00-1695)
Original: English
CANADA – TERM OF PATENT PROTECTION
Report of the Panel
The report of the Panel on Canada – Term of Patent Protection is being circulated to all Members,
pursuant to the DSU.  The report is being circulated as an unrestricted document from 5 May 2000,
pursuant to the Procedures for the Circulation and Derestriction of WTO Documents
(WT/L/160/Rev.1).  Members are reminded that, in accordance with the DSU, only parties to thedispute may appeal a panel report.  An appeal shall be limited to issues of law covered in the Panel
report and legal interpretations developed by the Panel.  There shall be no ex parte  communications
with the Panel or Appellate Body concerning matte rs under consideration by the Panel or Appellate
Body.
Note by the Secretariat:  This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the
date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report .
If the Panel Report is appealed to the Appellate Body, it sha ll not be considered for adoption by the DSB until after the
completion of the appeal.  Information on the current status of the Panel Report is available from the WTO Secretariat.WT/DS170/R
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TABLE OF CONTENTS
Page
I. INTRO DUCTION ................................................................................................................. ...1
II. FACTUAL ASPECTS ............................................................................................................. .2
III. FINDINGS AND RECOMMENDAT IONS REQU ESTED..................................................4
IV. ARGUMENTS OF THE PART IES ........................................................................................4
V. INTERIM REVI EW............................................................................................................... ..4
VI. FINDINGS.................................................................................................................... .............5
A. PRELIMINAR Y MATTE RS......................................................................................................5
1. Issues to be addressed by the Panel.........................................................................................5
2. Burden of proof.............................................................................................................. ...........7
3. Rules of in terpreta tion...................................................................................................... ........7
B. APPLICABILITY OF ARTICLE 70.2 OF THE TRIPS AGREEMENT  TO
INVENTIONS PROTECTED BY  OLD ACT PA TENTS.........................................................8
1. Arguments of the parties..................................................................................................... .....8
2. Evaluation by the Panel...................................................................................................... ....10
(a) Consideration of the United States' claim that "subject matter…which is protected" in
Article 70.2 is applicable to inventions which enjoy protection on 1 January 1996.................11
(b) Consideration of Ca nada's arguments.......................................................................................12
(i) The argument that Article 70.2 is  set aside by Article 70.1 ......................................................12
(ii) The argument that Article 70.2 does not include the obligatio n under Article 33....................15
3. Overall conclusion with respect to Article 70.......................................................................16
C. CONFORMITY OF SECTION 45 OF CANADA'S PATENT ACT  WITH
ARTICLE 33 OF THE TRIPS AGREEMENT ..........................................................................16
1. Arguments of the parties..................................................................................................... ...16
2. Evaluation by the Panel...................................................................................................... ....20
(a) Consideration of the United States ' claim in relation to Article 33 ..........................................20
(b) Consideration of Canada's  equivalence argument ....................................................................22
(i) The term of "effective" protection or " exclusive privilege and property rights" ......................22
(ii) "Normal or averag e" pendency period.....................................................................................24
(c) Consideration of Canada's  "availability " argument ..................................................................25
(i) Whether a term of protection that does not end before 20 years from the date of filing
was "available" under Section 45 of Canada's Patent Act .......................................................25
(ii) Whether resorting to informal and statutor y delays is consistent with Article 62....................27
(iii) Whether a term of protection that does not end before 20 years from the date of filing
can be made "available" in accordance with Article 33 prior to the date of
application of the TRIPS Agreement.........................................................................................28
VII. CONCLUSIONS AND RECOMMENDAT ION..................................................................29WT/DS170/R
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ATTACHMENT 1:  UNITED STATES' SUBMISSIONS...............................................................30
1.1 FIRST SUBMISSION OF THE UNITED STATES......................................................30
1.2 ORAL STATEMENT OF THE UNITED STATES AT THE
FIRST MEETING OF  THE PANEL..............................................................................35
1.3 RESPONSES OF THE UNITED STATES TO WRITTEN QUESTIONS
FROM THE PANEL –  FIRST MEETING.....................................................................39
1.4 RESPONSES OF THE UNITED STATES TO WRITTEN QUESTIONS
FROM CANADA – FIRS T MEETING .........................................................................47
1.5 REBUTTAL SUBMISSION OF  THE UNITED  STATES ............................................49
1.6 ORAL STATEMENT OF THE UNITED STATES AT THE
SECOND MEETING WITH  THE PANEL ...................................................................58
1.7 RESPONSES OF  THE UNITED STATES TO WRITTEN QUESTIONS
FROM THE PANEL – SECOND MEET ING................................................................64
ATTACHMENT 2:  CANADA' S SUBMISSIONS ...........................................................................66
2.1 FIRST SUBMISSI ON OF CA NADA ............................................................................66
2.2 ORAL STATEMENT OF CANADA AT THE FIRST MEETING
WITH THE PANEL .......................................................................................................88
2.3 RESPONSES OF CANADA TO WRITTEN QUESTIONS FROM
THE PANEL – FIRS T MEETING.................................................................................98
2.4 REBUTTAL SUBMIS SION OF CA NADA ................................................................123
2.5 ORAL STATEMENT OF CANADA AT THE SECOND MEETING
WITH THE PANEL .....................................................................................................135
2.6 RESPONSES OF CANADA TO WRITTEN QUESTIONS FROM
THE PANEL – SEC OND MEETING..........................................................................149
Note:  The Exhibits to the attachments may be inspected at the WTO Secretariat.WT/DS170/R
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I. INTRODUCTION
1.1 On 6 May 1999, the United States requested consultations with Canada pursuant to Article 4
of the Understanding on Rules and Procedures Governing the Settlement of Disputes  (the " DSU ")
and, to the extent that it incorporates by reference Article XXII of the General Agreement on Tariffsand Trade 1994, Article 64 of the Agreement on Trade-Related Aspects of Intellectual Property Rights
(the "Agreement", " TRIPS " or the " TRIPS Agreement ") regarding the term of protection granted to
patents that were filed before 1 October 1989 in Canada.
1  The United States and Canada held
consultations on 11 June 1999 in Geneva but failed to reach a mutually satisfactory solution to the
dispute.
1.2 In a communication dated 15 July 1999, the United States requested the Dispute Settlement
Body (the "DSB") to establish a panel under Article 6.2 of the DSU .2  Specifically, the United States
alleged that the TRIPS Agreement  requires Members to grant a minimum term of protection to all
patents existing as of the date of application of the Agreement and that Canada has been obligated to
apply the provisions of the TRIPS Agreement since 1 January 1996.  The United States alleged that
Canada's Patent Act  provides that the term granted to patents issued on the basis of applications filed
before 1 October 1989 is 17 years from the date on which the patent is issued and that granting ofsuch term of protection is inconsistent with Canada's obligations under Articles 33 and 70 of the
TRIPS Agreement .
1.3 At its meeting on 22 September 1999, the DSB established a Panel in accordance with
Article 6 of the DSU  with the following standard terms of reference:
"To examine, in light of the relevant provisions of the covered agreements cited by
the United States in document WT/DS170/2, the matter referred to the DSB by the
United States in that document and to make such findings as will assist the DSB in
making the recommendations or in giving the rulings provided for in those
agreements."
3
1.4 On 13 October 1999, the United States made a request, pursuant to paragraph 7 of Article 8 of
the DSU, to the Director-General to determine the composition of the Panel.  On 22 October 1999, the
Director-General composed the Panel as follows:
Chairman: Mr. Stuart Harbinson
Members: Mr. Sergio Escudero
Mr. Alberto Heimler
1.5 On 22 October 1999, the United States submitted a request for expedited consideration of the
dispute under Article 4.9 of the DSU  on the grounds that premature expiration of patents during the
dispute settlement procedure caused irreparable harm to  the patent owners.  It referred to the alleged
simplicity of the issues in dispute, the absence of  third parties and other circumstances.  At the
organizational meeting held on 25 October 1999, the United States offered to file its first submission
immediately and requested that Canada be required to file its first submission two weeks thereafter.
Canada opposed this request.  The Panel indicated that due to other demands on its members' time, itcould not accelerate the timetable prior to the first substantive meeting.  In response, the United States
proposed that each party file both first and rebuttal submissions prior to the first substantive meeting
in order to expedite the proceedings.  After the meeting, Canada opposed this proposal on the basis
that it would not give the parties adequate time to prepare their submissions properly, although it did
                                                     
1 WT/DS170/1;  IP/D17, 10 May 1999.
2 WT/DS170/2, 15 July 1999.
3 WT/DS170/3, 25 October 1999.WT/DS170/R
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not object to a timetable which followed the mi nimum periods suggested in Appendix 3 to the DSU .
On 29 October 1999 the Panel fixed its timetable based on those minimum periods and undertook to
make every effort to issue its report as soon as possible after the second substantive meeting.
1.6 The first substantive meeting of the Panel with the parties took place on 20 December 1999
and the second substantive meeting with the parties took place on 25 January 2000.
1.7 The Panel issued its interim report to the parties on 3 March 2000.  On 10 March 2000, both
parties submitted written requests for the Panel to review precise aspects of the interim report.  On
15 March 2000, Canada submitted a reply to the request submitted by the United States.  No further
meeting with the Panel was requested.
1.8 The Panel submitted its final report to the parties on 31 March 2000.
II. FACTUAL ASPECTS
2.1 The measure in dispute is Section 45 of Canada's Patent Act4 which the United States claims
is in violation of Articles 33 and 70 of the TRIPS Agreement .  For the purpose of the context of this
dispute, Sections 44 and 45 of Canada's Patent Act  are reproduced:
"44. Subject to section 465, where an application for a patent is filed under this
Act on or after October 1, 1989, the term limited for the duration of the patent is
twenty years from the filing date.
45. Subject to section 46, the term limited for the duration of every patent issued
under this Act on the basis of an application filed before October 1, 1989 is seventeen
years from the date on which the patent is issued."
2.2 The substance of Section 45 was, together with a large number of other proposed amendments
to the Patent Act , first introduced in Parliament on 6 November 1986 in Bill C-22.  Although still
more commonly referred to as Bill C-22, the Bill was enacted and became law under the title of An
Act to amend the Patent Act and to provide for certain matters in relation thereto6 (variously referred
to as "Bill C-22" or the "Bill") on 17 November 1987.
2.3 However, for a variety of reasons associated with the need to devise and draft complementary
regulations, to attend to other transitional issues as well as to give the intellectual property communitytime to adjust to the new system, most of the "modernizing" amendments, including the amendments
relating to the term of protection, were not brought into force until 1 October 1989.
2.4 The reference in Sections 44 and 45 to a threshold application date served some of the
transitional purposes required to effect the change from a system using a "seventeen year from grant"
term to another using a "twenty year from filing" term.  It did not, however, provide a mechanism for
converting from one system to the other.  In light of this fact, Bill C-22 included an additional
transitional provision that specified the law that w ould apply to pre-threshold date applications.  The
rule was set out in Section 27 of the Bill and provided that:
                                                     
4 Canadian Patent Act , R.S.C., ch. P-4, Section 45 (1985).
5 Section 46 states:
"(1) A patentee of a patent issued by the Patent Office under this Act after the 
coming into force of this section shall,  to maintain the rights accorded by the
patent, pay to the Commissioner such fees, in respect of such periods, as may be prescribed.
(2) Where the fees payable under subsection (1) are not paid within the time 
provided by the regulations, the term limited for the duration of the patent shall be deemed to have expired at the end of that time."
6 S.C. 1987, ch. 41, ss. 46, 47.  Reproduced in relevant part in Canada Exhibit 3.WT/DS170/R
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"27.  Applications for patents filed before the coming into force of the provisions of
this Act referred to in subsection 33(1 ) [which included the seventeen year term
provision] shall be dealt with and disposed of in accordance with the Patent Act  as it
read immediately before the coming into force of those provisions."7
2.5 The law applicable to such applications is ge nerally referred to as the "Old Act". Patents
granted on the basis of applications filed before 1 October 1989, whose term is provided for in
Section 45, are referred to as "Old Act patents".  Patents granted on the basis of applications filed on
or after 1 October 1989, whose term is provided for in Section 44, are referred to as "New Act
patents".
2.6 During the consultations and proceedings, Canada provided statistics from its Patent Office
which the United States did not contest.  An examination of the records of the Canadian Patent Office
relating to patents issued against applications filed prior to 1 October 1989 and that still existed whenthe TRIPS  Agreement took effect in Canada indicates that, as of 1 October 1996
8, 142,494 or just over
60 per cent of the Old Act patents then in existence (236,431) had terms that would not, assuming that
annual maintenance fees were paid, expire until, or until well after, the expiry of the 20-year period
following their application dates.  In a very large number of these cases, the expiry dates will be two
to five years after the expiry of the 20-year period.
2.7 As of 1 October 1996, 93,937 or just under 40 per cent of the Old Act patents then in
existence had terms that would, assuming the payment of annual maintenance fees, expire in less than
the 20-year period measured from their application dates.  In 84 per cent of these cases, the patent
would expire in the course of the nineteenth year following the application date.  In these "nineteenth"
year expiry cases, 52 per cent would expire in the last half of the year, while the remaining 32 per centwould expire in the first half.
2.8 A supplementary examination of the records of the Patent Office, but one conducted in
relation to Old Act patents which would still be in force on 1 January 2000, revealed a similar result.
Thus, of the 169,966 Old Act patents that would, subject to the continued payment of annual
maintenance fees, then still be in existence, 103,030 or just over 60 per cent will not expire until, oruntil well after, the expiry of the 20-year period following their respective application dates.
2.9 Correlatively, 66,936 or just under 40 per cent of the Old Act patents still in force on
1 January 2000 will, again subject to the payment of the annual maintenance fees, expire in less than
20 years measured from their respective application dates.  In 77 per cent of these cases, the patent
will expire in the course of the nineteenth year fo llowing the application date.  In these "nineteenth"
year expiry cases, 55 per cent will expire in the last half of the year, while the remaining 22 per cent
will expire in the first half.
2.10 An examination of the records of the Canadian Patent Office relating to applications filed in
Canada on or after 1 October 1989 reveals that, as of 1 November 1999, there have been 285,678 New
Act applications filed since the New Act came into force.  Of these New Act applications, 125,406
(approximately 43 per cent) have, since filing, requested examination.  On average the period between
the date of filing and the date of the request for examination for these 125,406 applications has been27½ months.
                                                     
7 Canada Exhibit 3.  Clause 27 of the Bill became Section 27 when enacted as part of the amending
Act.
8 For reasons related to application filing date data entry problems, the date used for the examination
was actually 1 October 1996.  However, given the number of patents issued in Canada on an annual basis,Canada is satisfied that the 1 October 1996 statistics are a reliable surrogate for the statistics that would have
been applicable on 1 January 1996 had the data been available.  See Canada Exhibit 8, paras. 13 and 15.WT/DS170/R
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2.11 The same exercise, when focussed on patents that have actually been issued against New Act
applications, reveals that 40,847 New Act patents have been issued by the Patent Office since the
coming into force date of the New Act on 1 October 1989.  The average pendency period, namely the
period between the application filing date and the date of grant, for this subset of New Act
applications which have been processed through to  grant has been approximately 60 months, or five
years.9
III. FINDINGS AND RECOMMENDATIONS REQUESTED
3.1 The United States requests that, since a large number of existing Old Act patents expire
before 20 years from the date of filing, the Panel find that Canada is in violation of Articles 33 and 70
of the TRIPS Agreement  and recommend that Canada bring its measures into conformity with its
obligations under the TRIPS Agreement .
3.2 Canada requests that the Panel find that:
(i) the term of patent protection available under Section 45 of Canada's Patent Act  is
equivalent or superior to, and is consistent and in conformity with, the term of patent
protection described by Article 33;
(ii) the minimum term of protection described by Article 33 is and has been available,
without exception, under the Canadian law and practice relating to Old Act patents;
(iii) by virtue of paragraph 1 of Article 70, Article 33 does not have retroactive
application to patents granted by the Commissioner of Patents prior to
1 January 1996;  and,
on the basis of those findings, conclude that Section 45 of Canada's Patent Act  conforms with its
obligations under the TRIPS Agreement .
IV. ARGUMENTS OF THE PARTIES
4.1 The arguments of the parties are provided for in their submissions to the Panel (see
Attachments 1.1 through 1.7 for the United States and 2.1 through 2.6 for Canada).
V. INTERIM REVIEW
5.1 On 10 March 2000, the United States and Canada requested the Panel to review, in
accordance with Article 15.2 of the DSU , certain aspects of the interim report that had been
transmitted to the parties on 3 March 2000.  The United States did not request an Interim Review
meeting but reserved the right to make comments on any changes suggested by Canada.  Canada
requested that it be provided with an opportunity to make written comments on changes proposed by
the United States and that in the event such an opportunity to respond in writing not be provided, it
reserved its right to request a further meeting with the Panel to discuss the matter at issue.
5.2 We reviewed the comments and arguments presented by the parties and finalized our report,
incorporating those comments that we considered justified.  To this end, we made a change to
paragraph 6.63 to characterize more accurately Canada's argument and paragraph 6.105 to reflect
                                                     
9 The 60-month total has three components.  Its first component involves the period of time between
the filing date and the date on which the applicant makes the request and pays the fee for "examination".  Onaverage the delay between these two dates has, over the last ten years, been approximately 15 months.  Subjectto the applicant asking that its appli cation be advanced in the queue and the payment of maintenance fees, the
second component involves the time spent waiting in the queue for an available examiner.  Over the last ten
years, the queue has averaged approximately 24 months.  The last component involves the time spent in
"examination" itself this period has averaged approximately 20 months.WT/DS170/R
Page 5
more accurately the relevant Canadian provision.  We also made minor typographical and syntactical
corrections.
5.3 The United States submits that our finding contained in footnote 48 that actions of
six developed country Members to amend their laws to comply with Article 33 of the TRIPS
Agreement do not constitute "subsequent practice" is incorrect because only seven developed country
Members needed to change their laws to provide a term of protection that does not end before
20 years from the date of filing.  According to the United States, of those seven Members,
six amended their laws and Canada is the sole exception.  The United States reiterates that "other
WTO Members did not amend their law for the simple reason that they were already in compliance".
The United States argues that, since Canada did not contest these facts, they sufficiently establish
"subsequent practice" in the application of the TRIPS Agreement .
5.4 Canada agrees with our conclusion but for different reasons.  Canada notes that each Member
referred to by the United States had a term of protection different from those of Canada.  Canada
contends that each instance of amendment was an isolated act of the Member responding to the
particular factual circumstances prevailing in its own jurisdiction and that the fact that several
Members determined that they had a similar, but distinct, need to amend their laws does not change
the "isolated act" character of their various legislative responses to the problem.  Canada states thatseveral Members doing similar things for dissimilar reasons does not constitute a "practice".
Therefore, Canada argues that the fact that other Members amended their laws to comply with
Article 33 obligations has no evidentiary relevance or value in making an analogous determination in
respect of Canada's term of protection provisions or its alleged need to amend them.  Canada adds that
the fact that it did not contest the "facts" of amendment and non-amendment says nothing aboutCanada's position in respect of the conclusion that the United States seeks to draw from the "facts".
5.5 We wish first to emphasize that we did not make a finding that there is no "subsequent
practice".  Rather, we stated in footnote 48 that there is insufficient evidence before us to make a
determination as to whether there is a "concordant, common and consistent" sequence of acts to
sufficiently establish a "discernable pattern implying the agreement of the parties" in respect ofmaking available a term of protection as required by Article 33 of the TRIPS Agreement  on the basis
of the practice of only six Members.  However, upon further consideration of this matter, we do not
consider it necessary to make a finding as to whether there is "subsequent practice" to determine the
requirement under Article 33 of the TRIPS Agreement  and to ascertain whether Section 45 of
Canada's Patent Act  is in conformity with Article 33.  We have therefore made the necessary changes
in footnote 48 to reflect our view.
VI. FINDINGS
A. PRELIMINARY MATTERS
1. Issues to be addressed by the Panel
6.1 In this section, we briefly summarize our understanding of each party's claims and defences.
6.2 The United States challenges Section 45 of Canada's Patent Act  on the basis that the patent
protection term of 17 years from the date of grant for those patent applications that were filed before 1October 1989 often ends before 20 years from the date of filing.  The United States argues that
pursuant to Articles 33 and 70.2 of the TRIPS Agreement , Canada was obligated to make available a
term of protection that does not end before 20 years from the date of filing to all inventions which
enjoyed patent protection on 1 January 1996, including those protected by Old Act patents, since
inventions enjoying protection under Old Act patents were existing "subject matter" which wereprotected on the date of application of the TRIPS Agreement .WT/DS170/R
Page 6
6.3 Canada argues that Section 45 of its Patent Act  is in conformity with Article 33 of the TRIPS
Agreement .  Canada supports its view that Section 45 is in conformity with Article 33 on the ground
that the term of the "exclusive privilege and property rights" available under Section 45 is equivalent
or superior to the "exclusive privilege and property rights" conferred by a patent in which the term of
protection does not end before 20 years from the date of filing.  Canada adds that Section 45 does notrequire that the term of protection end before the expiry of 20 years from the date of filing.
6.4 In addition, Canada argues that Section 45 did make "available" a term of protection that does
not end before 20 years from the date of filing.  Canada points out that Old Act applicants could resort
to informal or statutory delays to slow down the pa tent prosecution process so as to obtain a term of
protection that does not end before 20 years from the date of filing and that such requests were never
denied although the patent examiner and Commissioner of Patents  had the discretion not to grant the
requested delays.
6.5 Independently from its arguments concerning equivalence and availability, Canada initially
argued that since Old Act patents were granted pursuant to an administrative "act" of the
Commissioner of Patents, Canada was not required to provide TRIPS  obligations pursuant to
Article 70.1.  Canada later states that its interpretation of Article 70.1 to exclude Old Act patents from
the obligations under Article 33 did not mean that other obligations such as those set out inArticles 28 and 31(h) of the TRIPS Agreement  did not apply to patentable "subject matter" as the term
is used in Article 70.2.
6.6 We deduce from the arguments of the parties that this dispute only concerns those Canadian
patents that fulfil all of the following criteria:
(i) patents for which applications were filed before 1 October 1989;
(ii) Old Act patents which were granted less than three years after the date of filing the
application.  This necessarily excludes all Old Act patents granted after
1 October 1992;  and
(iii) Old Act patents which were in force on 1 January 1996, the date of application of the
TRIPS Agreement in Canada, and which are still in force.  This necessarily excludes
all patents granted before 1 January 1979, as their maximum 17-year term would
have expired.
This dispute does not concern Old Act applications pending on the date of application of the TRIPS
Agreement  in Canada as these would not fulfil criterion (b).
6.7 Based on the claims and defences raised by the parties, we will address the substantive issues
in the following order:
(i) first, we will consider whether there is an obligation to apply the rules of the TRIPS
Agreement  to inventions protected by Old Act patents.  This first hinges on the
question whether existing "subject matter…which is protected", as the expression is
used in Article 70.2 of the TRIPS Agreement , includes inventions protected by
Old Act patents that were in force on the date of application of the TRIPS Agreement
in Canada.  Subsequently, we evaluate Canada's argument that Article 70.1, not
Article 70.2, is the relevant provision and, even if Article 70.2 does generally apply,
that Canada is not required to apply the obligation set out in Article 33 to such
Old Act patents;  and
(ii) we will then consider whether Section 45 of Canada's Patent Act  is in conformity
with Article 33 of the TRIPS Agreement  and evaluate Canada's arguments that it is in
conformity, first on the basis that the terms of "effective" protection or "exclusiveWT/DS170/R
Page 7
privilege and property rights" made available under Section 45 is equivalent or
superior to the term of protection available under Article 33, and second on the basis
that it makes "available" a term of protection that does not end before 20 years from
the date of filing.
2. Burden of proof
6.8 Before reviewing the substantive issues, we need to address the issue of burden of proof, as
Canada argued that the United States was required to establish a prima facie  case that Article 70.2
applied to the "acts" of filing an application and issuing patents that occurred before the date of
application of the TRIPS Agreement .10
6.9 The Appellate Body stated in United States—Measures Affecting Imports of Woven Wool
Shirts and Blouses from India  that:
"…the burden of proof rests upon the party, whether complaining or defending, who
asserts the affirmative of a particular claim or defence.  If that party adduces evidence
sufficient to raise a presumption that what is claimed is true, the burden then shifts to
the other party, who will fail unless it adduces sufficient evidence to rebut the
presumption."11
6.10 Pursuant to the rule established by the Appell ate Body, the initial burden lies with the United
States to establish a prima facie  case of inconsistency with a particular provision of the TRIPS
Agreement  by adducing sufficient evidence to raise a presumption that its claims are true.  Upon
establishing a prima facie  case of inconsistency, the burden shifts to Canada which must refute the
claim of inconsistency.  Our analysis of the issues before us is based on this approach.
6.11 Canada also refers to Article 28 of the Vienna Convention on the Law of Treaties  (the " Vienna
Convention ")12 under which there is a codified presumption against the retroactive application of
treaty obligations which applies "unless a different intention appears from the treaty or is otherwise
established".  Canada contends that the United States has the burden of proving such a different
intention with respect to its interpretation of Article 70.  Canada's contention first requires a finding
that Article 70 has retroactive application, which we will consider below.
3. Rules of interpretation
6.12 Along with agreements governing trade in goods and services, protection of intellectual
property rights as encapsulated in the TRIPS Agreement  constitutes an integral part of the Marrakesh
Agreement Establishing the World Trade Organization  (the "WTO Agreement"). As such, the TRIPS
Agreement  is one of the "covered agreements" and is therefore subject to the DSU .13  Article 3.2 of the
DSU  provides that panels are to clarify the provisions of "covered agreements" in accordance with
customary rules of interpretation of public international law.
6.13 In United States — Standards for Reformulated and Conventional Gasoline  ("United States –
Gasoline "), the Appellate Body stated that the fundamental rule of treaty interpretation as set out in
Articles 31 and 32 of the Vienna Convention had "attained the status of a rule of customary or general
international law".14  Pursuant to Article 31(1) of the Vienna Convention , the duty of a treaty
                                                     
10 Canada's First Submission, para. 128;  Canada's Response to Panel Question 23.
11 WT/DS33/AB/R, adopted 23 May 1997, p. 14.
12 Vienna Convention on the Law of Treaties , done at Vienna, 23 May 1969, 1155 U.N.T.S. 331;
(1969) 8 International Legal Materials 679.
13 Appellate Body Report, India - Patent Protection for Pharmaceutical and Agricultural Chemical
Products  ("India – Patents "), WT/DS50/AB/R, adopted 16 January 1998, para. 29.
14 WT/DS2/AB/R, adopted 20 May 1996, p. 17.  See also Appellate Body Report, Japan - Taxes on
Alcoholic Beverages  ("Japan - Alcoholic Beverages "), WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R,WT/DS170/R
Page 8
interpreter is to determine the meaning of a term in accordance with the ordinary meaning to be given
to the term in its context and in light of its object and purpose.  We will apply the principles
enunciated by the Appellate Body in the United States — Gasoline  to interpret the relevant provisions
of the TRIPS Agreement  throughout the Report.
B. APPLICABILITY OF ARTICLE 70.2 OF THE TRIPS AGREEMENT  TO INVENTIONS
PROTECTED BY OLD ACT PATENTS
1. Arguments of the parties
6.14 The United States  construes Article 70.2 to mean that the TRIPS Agreement  gives rise to
obligations in respect of all patents existing on the date of application of the Agreement.  Initially, the
United States argued that the ordinary meaning of the reference in Article 70.2 to "subject matter"
existing at the date of application of the Agreement was patents existing on that date but it later
argued that this reference was to "inventions that can be patented", "patented inventions", "protected
inventions" and "existing inventions (which may already be patented)".
6.15 The United States argues that since Article 70.2 of the TRIPS Agreement  "gives rise to
obligations in respect of all" inventions existing on 1 January 1996 which are protected on that date,
Canada is obligated to apply the provisions of Article 33 to all patented inventions that existed on
1 January 1996.
6.16 Canada  initially responded that Old Act patents that were granted before 1 January 1996
pursuant to an act of the Commissioner of Patents were exempt from the obligations of the TRIPS
Agreement  on the ground that Article 70.1 states that the TRIPS Agreement  "does not give rise to
obligations in respect of acts which occurred before  the date of application of the Agreement for the
Member in question."
6.17 According to Canada, the word "acts" as used in Article 70.1 is not qualified as referring to
any particular type of class of act and therefore does not have a "limited or qualified meaning".  In
contrast, Canada notes that Articles 26.1, 28.1(a) and (b), 36, 41.1 and 70.4 qualify the use of the
word "acts" and refers to a secondary source that states that Article 70.1 expresses the rule of
non-retroactivity with respect to acts that occurred before the TRIPS  application date.  Canada
concludes therefore that the term "acts" includes acts of issuance by patent authorities and also the act
of filing an application.
6.18 Canada argues that the only limitation contained in the word "acts" as used in Article 70.1 is
the temporal element and that the "acts" of filing an application and granting a patent for a fixed term
are complete when they are made and therefore are not subject to the Agreement because they
occurred before the date of application of the TRIPS Agreement .
6.19 Canada argues that Article 33 is to be applied prospectively to acts of grant that occurred on
or after 1 January 1996 and not retroactively to "acts" of filing or grant that occurred before that date.
6.20 In response to Canada's defence that Section 45 of its Patent Act  is excluded from the
application of Articles 33 and 70.2 by the operation of Article 70.1, the United States  agrees with
Canada's interpretation of the word "acts" in Article 70.1, accepting that it could apply to both
infringing acts of third parties and administrative acts of Member governments so that acts of issuingpatents before 1996 are excluded from the operation of the TRIPS Agreement .  However, the United
States disagrees with Canada's view that Article 70.1 is applicable to patents in force on the date of
                                                                                                                                                                    
adopted 1 November 1996, p. 11;  Appellate Body Report,  India - Patents , supra footnote 13, para. 46;
Appellate Body Report,  European Communities - Customs Classification of Certain Computer Equipment ,
WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, adopted 22 June 1998, para. 84;  and Appellate BodyReport, United States - Import Prohibition of Certain Shrimp and Shrimp Products , WT/DS58/AB/R, adopted
6 November 1998, para. 114.WT/DS170/R
Page 9
application of the TRIPS Agreement , arguing that Article 70.1 has no relevance and that the inventions
under protection of those patents are covered by Article 70.2.  The United States emphasizes that its
interpretation of Article 70.1 and 70.2 has the advantage of avoiding any conflict between them and
gives them both meaning.
6.21 The United States argues that the "acts" of Canada's Patent Office prior to 1996 are not at
issue.  It submits that the violation is unrelated to any pre-1996 "act" but is related only to the subject
matter (protected inventions) that existed on 1 January 1996.  The United States argues that the rule in
Article 70.1 that pre-1996 acts are not subject to the obligations in the Agreement does not imply that
subject matter existing on 1 January 1996 is also not subject to the obligations of the Agreement.
According to the United States, Article 70.1 does not prevent the prospective application of TRIPS
standards, including the standard governing the term of protection, to existing subject matter as
mandated by Article 70.2.
6.22 The United States also supports its interpretation of Article 70.1 on the basis that if
Article 70.1 were to mean that the TRIPS Agreement  did not apply to existing subject matter which
derived from an act prior to the application of the TRIPS Agreement , it would render meaningless or
redundant paragraphs 3, 4, 5, and 6 of Article 70 and would exclude all intellectual property rights
that existed before 1996 from the operation of the TRIPS Agreement .  The United States argues that
such interpretation would undermine its effect and is not borne out by the subsequent practice of
Members or the negotiating history of the Agreement.
6.23 Canada argues that the introductory phrase of Article 70.2 "[e]xcept as otherwise provided
for in this Agreement" requires that, whatever its meaning, it is "trumped" by Article 70.1 and cannot
render Old Act patents subject to the Agreement.  It argues that the phrase is not limited to otherprovisions of Article 70.2 itself, but refers to the whole Agreement.  It argues that to interpret it
otherwise would be to subtract these words from the Agreement, in violation of rules of treaty
interpretation in Article 31 of the Vienna Convention  and WTO jurisprudence.
6.24 Canada relies on the argument that Article 28 of the Vienna Convention  introduces a
presumption against retroactivity "unless a different intention appears from the treaty or is otherwiseestablished".  It argued first that there is no different intention expressed in the TRIPS Agreement  but
later accepted that Article 70.2 expresses such a contrary intention, although in its view this is subject
to an overriding exception in the introductory phrase. Canada argues that the United States, as the
complainant, has the burden of establishing prima facie  that Articles 33 and 70.2 apply to Old Act
patents and that Article 70.1 is not applicable to Section 45 patents.
6.25 The United States  disagrees with Canada's interpretation of the introductory phrase in
Article 70.2 "[e]xcept as otherwise provided for in th is Agreement", and argues that it has no bearing
on the legal issues involved in this case.  It ar gues that if this phrase produced the result that
Article 70.1 applied to patents in force on the date of application of the TRIPS Agreement  to the
exclusion of Article 70.2, it would essentially read Article 70.2 out of the TRIPS Agreement .  It argues
that the introductory phrase refers, inter alia , to the second half of Article 70.2, which deals with
copyright and related rights, which have no bearing on this case.
6.26 In response to the United States' claim that TRIPS  obligations apply to inventions protected
by Old Act patents, Canada  argues that the obligation in respect of Article 33 of the TRIPS
Agreement  applies to a patent but not to "subject matter".  In Canada's view, a "patent" is the "vehicle
of protection", "a legal device through which the State protects an invention [and] not subject matter
within the ordinary meaning of Article 70.2."  The expression "subject matter", according to Canada,is the object of the protection, e.g. work, mark, design, invention, layout-design or geographical
indication.  In Canada's view, such distinction is reflected in Article 27 which defines what "subject
matter" is "patentable" or "protectable"; Article 28 which defines the rights to be conferred and
protected by a patent;  Article 29 which defines an applicant's obligation to disclose its invention as
part of the patent bargain;  and Article 33 which defines a variable term of protection during whichWT/DS170/R
Page 10
the rights conferred will endure.  According to Canada, the distinction between "subject matter" and
"patent" operates to detach the term of protection given by the "act" of the issuance of the patent from
the exclusive and other rights conferred by the "patent" itself.
6.27 Canada argues that the Article 33 obligation in respect of the term of protection is related to
the act of filing a patent application and the act of granting a patent.  According to Canada, the act offiling is the trigger which sets the expiry date for the term of protection.  However, Canada notes,
there can be no term of protection unless a patent is in fact granted because there is no basis for the
protection of the invention unless and until the patent is granted.  Canada maintains that the
commencement of the term of protection is triggered by the act of grant.  Canada states that both the
commencement and expiry of the term of prot ection depend upon the occurrence of these two
successive and related acts.  Canada concludes that the obligation in Article 33 is an obligation in
respect of "acts" and that Article 70.1 states that the TRIPS Agreement  does not give rise to
obligations in respect of "acts" which occurred before 1 January 1996.
6.28 Canada argues that the act of filing a patent application and the administrative act of granting
a patent were essential to initiate a term of protection under Article 33 and that Article 33 obligation
does not apply retroactively to Old Act patents because the word "acts" in Article 70.1 covers the act
of filing an application and the administrative act of grant of a patent.  Canada argues that, unlikeArticle 33 which is temporal in nature because of its linkage of both the commencement and the
expiry dates of the term of protection with the acts of filing and granting, the obligation in Article 28
does not depend upon the occurrence of any act.  According to Canada, the operation of Article 28
depends solely upon a patent being in existence.
6.29 The United States  notes that Canada acknowledges that pre-1996 acts do not preclude the
application of the obligations in Articles 27.1, 28 and 31(h) to existing subject matter.  The United
States asserts that Canada is unable to explain why the TRIPS obligation involving the term of
protection may be properly excluded under Article 70.1 while other obligations, such as the provision
of exclusive rights in Article 28, are not.
6.30 The United States contends that obligations in Articles 27, 28 and 31 of the TRIPS Agreement
cannot be distinguished in this regard from the obligation in Article 33.  The United States claims that
under Article 70.2, Canada must apply all TRIPS obligations to all inventions that were protected on
1 January 1996.
2. Evaluation by the Panel
6.31 We consider in this section the respective merits of:
(a) the United States' claim that the phrase existing "subject matter…which is protected",
as used in Article 70.2, includes inventions protected by Old Act patents on1 January 1996;  and
(b) Canada's arguments that:
(i) Article 70.2 of the TRIPS Agreement  is not applicable in this dispute on the
basis of the meaning of the word "acts" contained in Article 70.1 and the
introductory phrase "[e]xcept as otherwise provided for in this Agreement"
contained in Article 70.2.  We then consider the merit of this argument in
light of the principle of effective treaty interpretation;  and
(ii) Article 70.2, even if it were applicable to inventions protected by Old Act
patents on 1 January 1996, does not require Members to apply the obligation
of Article 33 of the TRIPS Agreement  in relation to those patents.WT/DS170/R
Page 11
(a) Consideration of the United States' claim that "subject matter…which is protected" in
Article 70.2 is applicable to inventions  which enjoy protection on 1 January 1996
6.32 The United States argued that the plain language of Article 70.2 requires Canada to apply the
obligations of the TRIPS Agreement  to all patented inventions that existed on 1 January 1996.15
Article 70.2 states in relevant part:
"Except as otherwise provided for in this Agreement, this Agreement gives rise to
obligations in respect of all subject matter  existing at the date of application of this
Agreement for the Member in question, and which is protected  in that Member on the
said date, or which meets or comes subsequently to meet the criteria for protection
under the terms of this Agreement. …"  (emphasis added)
6.33 Article 70.2 gives rise to obligations under the TRIPS Agreement  in respect of all "subject
matter" existing on the date of application of the Agreement, provided that the "subject matter" is"protected" on that date or meets or comes to meet the criteria for protection under the TRIPS
Agreement .  We note that in Article 70.2 the word "subject matter" is followed by the word
"protected" to read "subject matter…which is protected".  Although the term "subject matter" is not
defined in the Agreement, it is used in various subheadings and  provisions of Sections 1 through 7 of
P a r t  I I  o f  t h e  TRIPS Agreement  and is either preceded or followed by the word "protected" or
variations thereof, i.e. "protectable", "protection", to  describe the "subject matter" that can or is to be
"protected".
6.34 As it is undisputed that this case involves patents, the relevant provisions are contained in
Section 5 of Part II of the TRIPS Agreement .  The subheading of Article 27 is "Patentable Subject
Matter " and paragraph 1 of Article 27 provides that the "subject matter" of this Section is
"inventions".  The ordinary meaning of "subject matter", which is "the topic dealt with or the subject
represented in a debate, exposition, or work of art",
16 and the language " patents  shall be available for
any inventions " in Article 27.1 of the TRIPS Agreement  support the view that "subject matter" in
relation to patents is "inventions".
6.35 When we examine the "protection" available to inventions, Article 27, read as a whole,
supports the view that inventions are the releva nt subject matter;  novelty, inventive step and
usefulness are the requirements for their "protection";  and patents are a relevant form of "protection".
This view is confirmed contextually by other provisions in Part II of the TRIPS Agreement  that deal
with other "subject matter".  For example, "P rotectable Subject Matter" is the subheading of
Article 15, which provides, inter alia , that any distinctive sign is capable of constituting a trademark.
This indicates that signs are the relevant subject matter, distinctiveness is the basic requirement for
their protection and trademarks a relevant form of protection.  Other types of what we call "material"for the purpose of this analysis are described as "pro tected" or attracting "protection", i.e., "Protection
of Geographical Indications" in subheading of Article 22, "protected design" and "protected industrial
designs" in paragraphs 1 and 2 of Article 26, which is consistent with a view that these types of
"material" are specific categories of subject matter.   The word "protection" is qualified by a specific
intellectual property right in the phrase "copyright protection" in Article 9.2, which provides that it"shall extend to expressions", indicating that the intellectual property right is the form of protection
and is consistent with a view that "expressions" refer to literary and artistic works which are the
relevant category of subject matter.  Ind eed, the whole purpose of Part II of the TRIPS Agreement is to
describe categories of "material", specify requirements of each which, if met, will entitle it to the
conferral of the protection in the form of a particul ar intellectual property right and then to specify
those rights and their duration.
                                                     
15 Response of the United States to Panel Question 7;  Second Oral Statement of the United States,
para. 18.
16 The New Oxford Dictionary of English , (Oxford University Press, 1998), p. 1849.WT/DS170/R
Page 12
6.36 In view of the above, we find that the term "subject matter" refers to particular "material",
including literary and artistic works, signs, geographical indications, industrial designs, inventions,
layout-designs of integrated circuits and undisclosed information, which, if they meet the relevant
requirements set out in Part II of the Agreemen t, will attract protection in the form of the
corresponding intellectual property rights which are set out in  Sections 1 to 7 of Part II of the  TRIPS
Agreement .  We therefore find that the reference to "subject matter…which is protected" on the date
of application of the TRIPS Agreement in Article 70.2 includes "inventions" that were under patent
protection in Canada on 1 January 1996.  We also find that the United States has established a
prima facie  case that Article 70.2 is applicable to inventions protected by Old Act patents.17
(b) Consideration of Canada's arguments
6.37 In light of our preliminary finding set out in paragraph 6.36, we now consider Canada's
arguments that run counter to that finding.
(i) The argument that Article 70.2 is set aside by Article 70.1
6.38 There are two elements to Canada's argument that Article 70.2 is set aside by Article 70.1.
The first is based on Canada's interpretation of the word "acts" as it is used in Article 70.1 and the
second is based on the application of the introductory phrase "[e]xcept as otherwise provided"
contained in Article 70.2.  We will consider these in turn and then apply the principle of effectivetreaty interpretation to Canada's argument.
The meaning of "acts" as it is used in Article 70.1
6.39 We note that Canada initially argued that Old Act patents which were granted pursuant to the
administrative "act" of the Commissioner of Patents before 1 January 1996 are exempt from the
obligations of the TRIPS Agreement  by virtue of the non-retroactivity rule set out in Article 70.1.18
Canada relied on the fact that patents, unlike the subject matter of protection, flow from two "acts" -
the "act" of filing an application and the "act" of issuing the patent by the Commissioner of Patents -
both of which, in respect of Old Act patents, occurred before the date of application of the TRIPS
Agreement  and which were therefore covered by Article 70.1.19  The United States also stated that the
term "acts" can include the "act" of granting a patent but argued that these acts, where they occurredbefore 1996, are not subject to the obligations of the TRIPS Agreement .
20
6.40 The word "acts", the ordinary meaning of which is "things done",21 as used in Article 70.1,
may encompass acts of third parties such as acts of unfair competition;22  acts of infringement,
potential infringement or unauthorized use;23  acts not requiring the authorization of the right holder;24
                                                     
17 The United States pointed out that "subject matter" refers to the matter that is or can be entitled to
intellectual property protection, such as "broadcasts that can be copyrighted, signs that can be trademarked andinventions that can be patented."  The United States emphasized that its complaint is not based on any pre-1996"act" but is "related only to subject matter (protected inventions) that existed on [1 January 1996]".
Accordingly, the United States noted that Article 70.1 is not relevant in this dispute and that the irrelevance of
Article 70.1 to the specific facts of this dispute did not re nder Article 70.1 meaningless.  It stated that construing
the first paragraph of Article 70 as a provision that is "otherwise provided for in this Agreement" has the effectof reading the second paragraph of that Article out of the TRIPS Agreement  and produced the speaking note of
the chairman of the 10 + 10 meeting which suggested that the introductory phrase in Article 70.2 was intendedto apply to the second sentence of Article 70.2 (see U.S. Exhibit 11).
18 Canada's First Submission, para. 5(d).
19 Canada's Response to Panel Question 6(c).
20 Rebuttal Submission of the United States, para. 25.
21 Webster's New World Dictionary , (The World Publishing Company, 1976), p.13.
22 Article 22.2 of the TRIPS Agreement.
23 Articles 26.1, 28.1(a) and (b), 36, 41 and 70.4 of the TRIPS Agreement.
24 Article 37 of the TRIPS Agreement.WT/DS170/R
Page 13
or an act of a right holder in relation to provisional measures.25  On a broader view, "acts" may also
refer to the acts of competent authorities of Members as reflected in Article 58 of the TRIPS
Agreement .
6.41 However, for the purpose of this dispute, we do not consider it necessary to decide whether
this broader view of the meaning of the word "acts" is correct, because even if, arguendo , "acts" as
used in Article 70.1 include the administrative act of granting a patent by the Commissioner of
Patents, they would still be distinct from the "subject matter…which is protected" as used in
Article 70.2 which we have defined in paragraph 6.3 6 as inventions protected by Old Act patents on
the date of application of the TRIPS Agreement .  Even though Article 70.1 may exclude the
administrative act of granting a patent prior to 1 January 1996 from the coverage of the TRIPS
Agreement , we cannot conclude on the basis of that fact that the non-retroactivity rule of Article 70.1
governs inventions protected by Old Act patents that existed on 1 January 1996 because theadministrative act of granting a patent results in the protection of the underlying "subject matter" and
this protection granted to the "subject matter" is ongoing and can continue past 1 January 1996.  To
the extent that such protection does so continue past 1 January 1996 in Canada, it is a situation which
has not ceased to exist
26 by the date of application of the TRIPS Agreement  and which is therefore
subject to the obligations of the Agreemen t from that date.  Acts to apply the TRIPS Agreement  after
that date to such situations are not "acts" which occurred before the date of application of the
Agreement for the Member in question and therefore not covered by Article 70.1.
6.42 For the reasons set out above, we confirm our preliminary finding in paragraph 6.36 that
Article 70.2, not Article 70.1, is applicable to inventions protected by Old Act patents on
1 January 1996.  We also find that the United States has established a prima facie  case that the
ongoing protection of the inventions protected by Old Act patents is a situation that did not cease to
exist prior to entry into force of the TRIPS Agreement  within the meaning of Article 28 of the Vienna
Convention .
The meaning of "[e]xcept as otherwise provided" as used in Article 70.2
6.43 Canada also argued that Article 70.2 is not applicable because paragraph 1 of Article 70 is "a
proviso 'otherwise set out in the Agreement'" which prevails over paragraph 2 of Article 70 on which
the United States relies to establish the application of Article 33 to Section 45 patents.27  Canada
claimed that even though patentable subject matter is defined as inventions that meet or are capable of
meeting the criteria set out in Article 27, and that those inventions which existed on the date of
application of the TRIPS Agreement  were entitled to the benefit of the obligations under the
Agreement, this was subject to the qualification contained in the introductory phrase in Article 70.2
"except as otherwise provided" in the Agreement,  which referred to Article 70.1 and set aside
Article 70.2 in this dispute.
6.44 The introductory phrase "[e]xcept as otherwis e provided for in this Agreement" qualifies
Article 70.2 and the exception is only relevant where there is another provision that is inconsistent
with the first sentence, in which event the other provision would prevail.  Because we consider that
the word "acts" and the term "subject matter" are different concepts with disparate meanings and theterm "acts" as used in Article 70.1 refers only to discrete acts which predate the date of application of
the TRIPS Agreement  and not to subsequent acts to apply the Agreement, including to situations that
have not ceased to exist on that date, there is no inconsistency between paragraphs 1 and 2 of
Article 70.  Article 70.1 therefore does not fall within the exception and does not set aside
Article 70.2.
                                                     
25 Article 50.7 of the TRIPS Agreement.
26 Article 28 of the Vienna Convention.
27 Canada's First Submission, para. 126;  Canada's Response to Panel Question 7.WT/DS170/R
Page 14
6.45 This interpretation has the benefit of avoiding any conflict between paragraphs 1 and 2 of
Article 70, which is consistent with the concept of presumption against conflict as it exists in public
international law.28
6.46 Our interpretation is also confirmed by the negotiating history.  When the introductory phrase
was being discussed during the TRIPS  negotiations, the Chairman of the Negotiating Group stated:
"In the first line [of Article 70.2], the initial phrase would be amended to read 'Except
as otherwise provided for in this Agreement…'  This would make it clear that, for
example, Article 18 of Berne appl ies by virtue of Article 9.1."29
6.47 For the reasons given above, we do not agree that the introductory phrase "[e]xcept as
otherwise provided for in this Agreement" in Article 70.2 can be construed to refer to paragraph 1 of
Article 70.
Effective interpretation
6.48 We note that if we were to accept Canada's argument that patents granted prior to
1 January 1996 are not subject to the obligations in the TRIPS Agreement  or that Article 70.1 is a
provision "otherwise provided for in this Agreement", drafters of the TRIPS Agreement  would not
have needed to delineate the nature of obligations of Members with respect to "all subject matter
existing at the date of application of this Agreement" in Article 70.2.  Canada's argument wouldreduce paragraph 6 of Article 70 to redundancy or inutility.  There would be no need to state in
paragraph 6 that Members are not required to apply rules concerning compulsory licensing to
compulsory licences granted before the date the Agreement became known.  In addition, to the extent
that Article 70.1 is construed to mean that a Member had no TRIPS  obligations with respect to
intellectual property for which the act of filing an application occurred prior to 1 January 1996,Article 70.7, which permits pending applications for protection to be amended to take into account
enhanced protection, would be reduced to inutility.
6.49 Interpretation of treaty language that reduces certain provisions to redundancy or inutility is
contrary to the principle of effective interpretation.
30  The Appellate Body stated in United States —
Gasoline  that "[o]ne of the corollaries of the 'general rule of interpretation' in the Vienna Convention
is that interpretation must give meaning and effect to all the terms of the treaty.  An interpreter is not
                                                     
28 The Panel in Indonesia - Certain Measures Affecting the Automobile Industry  stated:  "…we recall
first that in public international law there is a presumptio n against conflict.  [footnote deleted]  This presumption
is especially relevant in the WTO context since all WTO agreements, including GATT 1994 which wasmodified by Understandings when judged necessary, were negotiated at the same time, by the same Membersand in the same forum."  WT/DS54/R, WT/DS55/R, WT/DS64/R, adopted  23 July 1998, para. 14.28.
29 10 + 10 Meeting, Speaking Note for the Chairman  (16 December 1991) which was circulated to all
Members and is reproduced in U.S. Exhibit 11.
30 The principle of effective interpretation or "l'effet utile" or in latin ut res magis valeat quam pereat
reflects the general rule of interpretation which requires that a treaty be interpreted to give meaning and effect toall the terms of the treaty.  For instance, one provision should not be given an interpretation that will result innullifying the effect of another provision of the same treaty.  For a discussion of this principle, see Yearbook of
the International Law Commission, 1966, Vol. II A/CN.4/SER.A/1966/Add.1 p. 219 and following.  See also
e.g., Corfu Channel  Case (1949) I.C.J. Reports, p. 24 (International Court of Justice);  Territorial Dispute Case
(Libyan Arab Jamahiriya v. Chad)  (1994) I.C.J. Reports, p. 23 (International Court of Justice);  and Oppenheim's
International Law (9th ed., Jennings and Watts eds., 1992), Vol. 1, 1280-1281.  See also the statement of the
Appellate Body in  United States - Gasoline , supra  footnote 14, p. 12 ("An interpreter is not free to adopt a
reading that would result in reducing whole clauses or para graphs of a treaty to redundancy or inutility") and the
Appellate Body Report on Japan – Alcoholic Beverages, supra  footnote 14 , p. 12.  See also the Panel Report on
Korea - Definitive Safeguard Measure on Imports of Certain Dairy Products , WT/DS98/R, adopted
12 January 2000, para. 7.37.WT/DS170/R
Page 15
free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to
redundancy or inutility".31
6.50 Our interpretation that Article 70.1 does not fall within the introductory phrase "[e]xcept as
otherwise provided for in this Agreement" does not reduce that phrase to inutility.  In our view, the
reference in the introductory phrase in Article 70.2 includes the second sentence of paragraph 2 andparagraphs 4 and 6 of Article 70.
6.51 For all of the reasons given above, we confirm our preliminary finding set out in
paragraph 6.36.
(ii) The argument that Article 70.2 does not include the obligation under Article 33
6.52 Canada also argued that, even if Article 70.2 were construed to cover existing patents, it
would do so in respect of the scope of patent rights set out in Article 28 and the obligation in
Article 31(h), but not the obligation to make available the term of protection provided underArticle 33.  This argument is based on the notion that, unlike the rights conferred by a patent which
are in respect of the invention (subject matter), the term of protection is an "integral part" of the act of
grant and thus subject to the provision in Article 70.1.
32  However, we cannot discern any merit or
justification in the TRIPS Agreement  for this distinction.  No evidence has been advanced which
would explain why the administrative "act" of grant of a patent, which confers protection oninventions, would preclude the application of the term of protection contained in Article 33 to existing
patents but not the exclusive rights set forth in Article 28 and other matters set out in Section 5 of
Part II of the Agreement.
6.53 In our view, Members are required to comply with all the relevant obligations set out in the
TRIPS Agreement , including those in Section 5 of Part II, which require Members to provide patent
protection for a term consistent with the requirement set out in Article 33 in respect of existing
"subject matter…which is protected" on the date of application of the TRIPS Agreement , or which
meets or comes to meet the criteria for protection.  Neither the textual nor the contextual reading of
Section 5 of Part II supports the notion that one obligation can be detached from the patent issued to
the right holder or that Members need not comply with all relevant TRIPS  obligations in relation to
them.  Holders of patents valid on the date of application of the TRIPS Agreement  are entitled to
protection of all of the rights set out in the Agreement for a term consistent with the requirement in
Article 33.
6.54 Our interpretation is confirmed by footnote 3 to the TRIPS Agreement ,
33 which forms part of
the overall context of Article 70.2.  The language contained in footnote 3 suggests that protection
afforded to right holders of intellectual property is comprehensive and does not state or imply that
certain rights or obligations can be detached and considered in isolation.  In particular and germane tothis dispute, the expression "matters affecting the…scope" of intellectual property rights refers,
inter alia , to the term of protection and confirms that the term of protection (of a patent among other
intellectual property rights) is to be protected togeth er with the exclusive rights within the scope of a
patent as set out in Article 28.
                                                     
31 United States - Gasoline , supra  footnote 14, p. 23.  See also Appellate Body Report, Japan -
Alcoholic Beverages , supra  footnote 14, p. 12;  Appellate Body Report, Canada - Measures Affecting the
Importation of Milk and the Exportation of Dairy Products , WT/DS103/AB/R, WT/DS113/AB/R, adopted 27
October 1999, para. 133;  and Appellate Body Report, Argentina - Safeguard Measures on Imports of Footwear ,
WT/DS121/AB/R, adopted 12 January 2000, para. 88.
32 Canada's Response to Panel Questions 36 and 37.
33 We note that footnote 3 describes "protection" "for the purposes of Articles 3 and 4" of the TRIPS
Agreement .  However, we are of the view that the footnote can serve as context in interpreting protection to be
provided for intellectual property rights.WT/DS170/R
Page 16
6.55 For the reasons set out above, we find that Canada is required to apply the obligation under
Article 33 to inventions protected by Old Act pa tents on 1 January 1996 and confirm our preliminary
finding set out at paragraph 6.36.
3. Overall conclusion with respect to Article 70
6.56 We find that the United States established a prima facie  case that Article 70.2 applied to
inventions protected by Old Act patents in force on 1 January 1996 and therefore required developed
country Members to apply the relevant obligations under the TRIPS Agreement  as of that date to those
inventions.  For the reasons set out above, we reject Canada's argument that the non-retroactivity rule
embodied in Article 70.1 is the provision applicable to inventions protected by Old Act patents in
force on the date of application of the Agreement on the basis that those patents were granted pursuant
to an "administrative act" of the Commissioner of Patents.  For this reason, Article 70.1 does not
override Article 70.2 despite the introductory phrase "except as otherwise provided for in thisAgreement".  We also reject Canada's argument that Article 70.2 does not require Members to apply
the obligations of Article 33 to inventions protected by Old Act patents.  In so doing, we confirm our
finding that, within the context of this dispute, "s ubject matter" refers to inventions that meet the
requirements for patentability set out in Article 27.1 and that patents constitute one form of protection
of those inventions, with the result that the term "subject matter…which is protected" as used inArticle 70.2 includes inventions which are protected by patents, i.e., patented inventions.  In view of
that finding, Canada was required to apply the relevant obligations of the TRIPS Agreement , including
those set out in Section 5 of Part II of the Agreement, which contains Article 33, to inventions
protected by Old Act patents that were in force on 1 January 1996.
C. CONFORMITY OF SECTION 45 OF CANADA'S PATENT ACT
 WITH ARTICLE 33 OF
THE TRIPS AGREEMENT
6.57 In this section, we consider whether Section 45 of Canada's Patent Act  is in conformity with
Article 33 of the TRIPS Agreement .  Before evaluating the conformity of Section 45 with Article 33,
the principal arguments made by the parties are set forth below.
1. Arguments of the parties
6.58 The United States  argues that the TRIPS Agreement  requires that Canada grant a term of
protection for patents that runs at least until 20 year s after the filing date.  The United States contends
that the plain meaning of Article 33 indicates that the term of protection set forth in Article 33 is a
minimum term and that this interpretation is supported contextually by Article 1.1 of the
TRIPS Agreement , which states that "Members may, but shall not be obliged to, implement…more
extensive protection than is required by this Agreemen t".  With respect to those patents that were filed
before 1 October 1989 and granted in less than thre e years by the Canadian Commissioner of Patents
and in existence as of the TRIPS  application date, the United States claims that Canada is in violation
of Articles 33 and 70.2 because the protection term of 17 years from the date of grant provided by
Section 45 of Canada's Patent Act  often ends before a term of 20 years from the date of filing.
6.59 It is the United States' contention th at Canada is in violation of the  TRIPS Agreement  with
respect to each and every patent for which the term of  protection is less than 20 years as of the filing
date.  For those patents that were issued in exactly three years, the United States notes that there is no
difference between the term provided by Canada and the term required by the TRIPS Agreement .  If a
patent took longer than three years to be granted, the United States notes that the term of protection
would actually be longer than required.
6.60 Referring to the figures set out in paragraph 2.10, the United States notes that, as of
1 January 2000, 66,936 Old Act patents would expire s ooner than would be the case if Canada had
provided a term of 20 years from filing.  The United States contends that historically, 50 per cent
(50%) of patent applications filed in Canada are from U.S. applicants.  Thus, the United StatesWT/DS170/R
Page 17
estimates that well over 33,000 U.S. patent holders are currently holding patents with a term less than
that required under the TRIPS Agreement .
6.61 The United States notes that under the Vienna Convention , "any subsequent practice" in the
application of an Agreement may also establish "the agreement of the parties regarding its
interpretation".  In this case, according to the Un ited States, state practice of other developed country
WTO Members in applying Articles 33 and 70 of the TRIPS Agreement  demonstrates the term of
patent protection that other Members have viewed as legally required by the TRIPS Agreement .  In
this regard, the United States notes that, in addition to itself, Australia, Germany, Greece,
New Zealand and Portugal have revised their laws to conform to the 20-year, as of the filing date,
protection term.
6.62 Canada  rebuts that Section 45 of Canada's Patent Act  provides patent right holders an
"effective" protection for the "exclusive privilege and property rights" that are "equivalent orsuperior" to the term of "exclusive privilege and property rights" provided by Article 33 of the
TRIPS Agreement .
6.63 Canada claims that Article 33 does not provide for a minimum of 20 full years of protection
for the "exclusive privilege and property rights" b ecause the term referred to in Article 33 will be
eroded by the operation of reasonable procedures which are prerequisites to the grant of a patent.According to Canada, the period of time between the date of filing and the grant of a patent will vary.
Canada states that Article 62.2 recognizes that the period referred to in Article 33 will be curtailed by
reasonable procedures that are prerequisite to the granting of a patent.
6.64 Canada argues that where in the normal course it takes, as it currently does in Canada in
respect of New Act patents, five years to complete the examination process for a patent whose term isrelated to its application filing date, the period of exclusivity will be reduced accordingly.  Since the
five year examination period is the normal or  average examination period, it must, in Canada's
submission, be viewed as being "a reasonable peri od which avoids any unwarranted curtailment of the
period of protection".
6.65 Canada argues that in cases where the term of protection is measured from the date of filing,
the period during which a successful applicant will enjoy the exclusive privilege and property right
conferred by a patent once issued will, in the normal course, be 15 years.  Canada adds that it may
provide either more or less protection depending on the length of the examination process in any
particular case.  Canada points out that under Section 45, on the other hand, a successful applicant
will enjoy 17 years of constant protection for the "exclusive privilege and property rights" conferred
by a patent.
6.66 Canada then claims that since the term of the "effective" protection for the exclusive rights
conferred by Section 45 is routinely two years l onger than the "normal or average" period of
"effective" protection provided by the joint operation of Articles 33 and 62 of the TRIPS Agreement ,
Article 33 and Section 45 can be said to be substantively or "effectively" equivalent and therefore
Section 45 is consistent with the minimum standard prescribed by the TRIPS Agreement .
6.67 Canada submits that because both Section 45 and Article 33 provide an equivalent period of
"effective" protection, it acted within the scope of the freedom afforded to Members under Article 1.1
which permits Members "to determine the appropriate method of implementing the provisions of [the]
Agreement within their own legal system and practice".
6.68 The United States  argues that Canada's equivalence argument is flawed in that it relies on the
"normal or average" period of "effective" protection or "exclusive privilege and property rights".  TheUnited States notes that Canada uses the averaging methodology in two ways.  First, it claims that
since five years is the "normal or average" pe ndency period for New Act patent applications, the
effective term of protection under a regime of 20 years from filing would "normally" be an "average"WT/DS170/R
Page 18
of 15 years, which is less than the 17-year period provided under the Old Act.  The United States
points out that Canada also uses the averaging methodology to make the opposite comparison, i.e., to
assert that the "average" two to four year pendency period for its Old Act patents makes these patents
"equivalent to and in fact...longer than the normal or average" period of "effective" protection
required by the TRIPS Agreement .  The United States contends that Canada's reliance, however, on
average pendency periods of Old Act and New Act patents inevitably means that its analysis fails to
take into account those patents with pendency periods outside the average. The United States
maintains that the important element is that every Old Act patent that was pending for less than three
years before being issued by Canada has a term that ends before a period of 20 years from the date of
filing.
6.69 The United States argues that although the application of Section 45 has in fact caused harm
to U.S. right holders, the United States observes that the mere potential of the provision to result in the
denial of a TRIPS -level patent term is sufficient to establish a violation of Articles 33 and 70.
Furthermore, the United States notes that in light of Canada's failure to properly implement these
provisions, proof of actual trade damage is not required and nullification or impairment is presumed.
Finally, the United States contends that it is irrelevant whether, under certain conditions, Section 45
might result in the grant of a term of protection to certain right holders that is longer than requiredunder the TRIPS Agreement .  The United States argues that Canada cannot rely upon its TRIPS -plus
level treatment of some patentees to justify its denial of TRIPS -level treatment to other patentees.
6.70 Canada states that it is not arguing that when allegedly term-deficient Old Act patents are
added together with those having surplus term and are then appropriately divided, the resulting
average term is greater than the term referred to in Article 33 and is, therefore, consistent with the
TRIPS  standard.  Canada also claims that it is not arguing that the "more favourable treatment"
accorded to surplus term compensa tes for the alleged deficiency in the term granted to so-called
"term-deficient" Old Act patents.
6.71 Canada claims that Section 45 of its Patent Act  does not prescribe that the term of protection
shall end before the expiration of the 20-year period from the date of filing.  Canada argues that aterm of protection of at least equal to (and frequently in excess of) a period of 20 years from the date
of filing was "available" under Section 45, without ei ther exceptions or discrimination, to any Old Act
applicant who wished to count and obtain a term of protection on that basis.  Therefore, in Canada's
view, Section 45 is consistent with Article 33 of the TRIPS Agreement .
6.72 Canada points out that over 60 per cent of Old Act applicants obtained or will obtain terms of
protection that are equal or superior to the TRIPS  mandated term of protection of 20 years from the
date of filing.  The other 40 per cent chose not to take advantage of the delays available to ensure aterm of protection that would end before the expiration of a period of 20 years from the date of filing.
However, Article 33 only requires that a protection term of 20 years be "available".  Canada
concludes that since there is nothing in the Canadian "availability" measures which discriminates
between applicants or applications, what was obtained in respect of 60 per cent of the Old Act
applications was "available" for 100 per cent of the Old Act applications.
6.73 Canada argues that the longevity of patent protection can be strategically controlled by the
applicant so as to obtain a patent protection term of 20 years from the date of filing by means of
delaying the patent prosecution process.
34  Canada points out that under Section 30 of the Old Act, an
                                                     
34 Canada states in para. 37 of its First Submission:
"Many means exist that allow an applicant to slow down the prosecution of an old Act application.
These include the following:
(i) An applicant can achieve a delay in processing simply by asking the patent examiner. In my
personal experience, I am unaware of any such request being refused.
(ii) One simple means for delaying an application is for an applicant to wait until the end of each
time limit imposed upon the applicant to take a specified action. For example, an applicant can
wait until the end of the six month period for responding to each report issued by the examinerWT/DS170/R
Page 19
applicant can delay the patent prosecution process by up to 42 months.  Section 73 provides an
additional 12 months of delay.  When the delays available under Sections 30 and 73 are added to the
17-year term of protection for patents, the total term of protection available is 21.5 years from the date
of filing, in addition to other delays that may occur in the examination process.
6.74 Canada argues a patent protection term of 20 years from the date of filing was available
universally and that Article 33 does not require a Member to impose a patent protection term of
20 years from the date of filing against the revealed preference of the applicant.
6.75 In Canada's view, it acted within the scope of the freedom afforded to Members under
Article 1.1 of the TRIPS Agreement  "to determine the appropriate method of implementing the
provisions of this Agreement within their own legal system and practice".  Consistent with the legal
test established under the India—Patents , Canada argues that its "means" of availability of the TRIPS
mandated patent protection term of 20 years from the date of filing was provided on a "sound legalbasis".
6.76 The United States  responds that the Canadian law provides no sound legal basis for patent
applicants that filed applications before 1 October 1989, to obtain a term of protection that did not end
before a period of 20 years from the filing date.  It asserts that neither of the provisions of law cited by
Canada - Sections 30 and 73 of the Old Act - provided such a basis.
6.77 The United States argues that an Old Act applicant could obtain a term of 20 years from filing
by actually abandoning its patent application not once,  but twice.  Then, the United States notes, after
twice abandoning its application for a maximum period of time, and having it reinstated, the applicant
could forfeit that application, wait a maximum period of time, and then reinstate it a third time.
6.78 The United States points out that Section 30(2) of the Old Act provides that the reinstatement
of an abandoned patent application would only be permitted if a delay "was not reasonably
avoidable".
35  It argues that, far from providing a legally guaranteed right to delay a patent
application, Canadian law explicitly prohibits use of the abandonment and reinstatement procedure
described by Canada where a delay was reasonably avoidable.
6.79 The United States asserts that Canada essentially argues that its patent examiners routinely
ignore the mandatory provisions of Section 30(2), asserting that its Commissioner of Patents is
unaware of reinstatement ever having been refused.36  However, the United States notes, regardless of
the practices of Canada's patent examiners, Section 30(2) unambiguously requires that reinstatement
be denied where delays were reasonably avoidable.
                                                                                                                                                                    
and until the end of the six month period for paying the final fee due before a patent is
granted.
(iii) An applicant can also choose to not respond to an examiner’s report within the six month
period following issuance of the report. This has the consequence that the application will betreated as abandoned; however, an abandoned application can be reinstated within twelve
months.
(iv) An applicant can further choose to not pay the final fee within the six month period following
the Office notice requiring payment. This has the consequence that the application will be
treated as forfeited; however, a forfeited application can be restored within six months.
(v) Prior to October 1, 1996, there was a provision in the Patent Rules that permitted an applicant,
upon payment of a fee, to postpone the date of issue of a patent by up to 10 weeks."
35 Canadian Patent Act , R.S.C., ch. P-4, § 30(2) (1985).  Reproduced in relevant part in Canada
Exhibit 16.
36 Canada's First Oral Statement, para. 47.WT/DS170/R
Page 20
6.80 The United States suggests that Canada's arguments are similar to those rejected by the Panel
and Appellate Body in India - Patents .37  The United States notes that, in that dispute, India argued
that certain "administrative instructions" provided a "sound legal basis to preserve novelty of
inventions and priority of applications as of the relevant filing and priority dates," despite provisions
of India's Patents Act that required the Patents Controller to reject such applications.38  The United
States points out that the Appellate Body looked specifically at the provisions of India's Patents Act,
and decided:
"We agree with the Panel that these provisions of the Patents Act are mandatory.
And, like the Panel, we are not persuaded that India's 'administrative instructions'
would prevail over the contradictory mandatory provisions of the Patents Act."39
6.81 The United States argues that Section 30(2) of the Old Act is mandatory in that abandoned
applications can be reinstated only where the delay was "not reasonably avoidable."  Thus, it argues,the procedure pursuant to which Canada argues that 20-year patent terms were available is prohibited
by the very statute on which Canada bases its argument.
2. Evaluation by the Panel
6.82 In this section of the Report, we examine the obligation set out in Article 33 of the TRIPS
Agreement  to ascertain whether Section 45 of Canada's Patent Act  is in conformity with Article 33.
We then consider whether the text or context of Article 33 allows Canada to use the concept of
"effective" protection or "exclusive privilege and property rights" to argue that there is an equivalence
of term of protection made available by Section 45 and Article 33.  We also evaluate Canada's use of
the average pendency period of the New Act and Old Act patents in support of its argument that the
term of protection made available under Section 45 is equivalent or superior to the term of protectionmade available by Article 33.  We then examine whether Section 45 makes "available", as that term is
used in Article 33, a term of protection that does not end before 20 years from the date of filing.
(a) Consideration of the United States' claim in relation to Article 33
6.83 The United States argued that Article 33 of the TRIPS Agreement  requires Canada to provide
a minimum term of protection that "shall not end before the expiration of…twenty years counted fromthe date of filing" for all Old Act patents.  It is the United States' contention that the 17-year term of
protection measured as of the date of grant is inconsistent with Article 33 on the ground that Old Act
patents often expire before 20 years from the date of filing.
6.84 Article 33 of the TRIPS Agreement states:
"The term of protection available shall not end before the expiration of a period of
twenty years counted from the filing date."
6.85 The language provided in Article 33 requires Members to make available a "term of
protection" for patents that does not end before 20 years from the date of filing.  The use of the term
"shall not end before " suggests that the 20-year period as of the filing date is a minimum term of
protection for patents to be made available by Members.  Such interpretation of Article 33 is
supported by the minimum standard language governing the term of protection for copyright,
trademarks, industrial designs, and layout-designs of integrated circuits which provide that the term ofprotection is to be " no less  than 50 years",
40 "no less  than seven years",41 "at least  ten years"42 and
                                                     
37 Appellate Body Report, India – Patents , supra  footnote 13.
38 Ibid. , paras. 67-71.
39 Ibid. , para. 69.
40 Article 12 of the TRIPS Agreement  provides that "[w]henever the term of protection of a work, other
than a photographic work or a work of applied art, is calculated on a basis other than the life of a natural person,
such term shall be no less than 50 years from the end of the calendar year of authorized publication. …"WT/DS170/R
Page 21
"shall not end before  the expiration of a period of 10 years counted from the date of filing an
application for registration",43 respectively.
6.86 Interpretation of Article 33 as a minimum standard for the expiry of the available term of
protection ("minimum standard") is also borne out by Article 1.1 of the TRIPS Agreement  which
forms part of the context of Article 33.  Article 1.1 provides:
"Members shall give effect to the provisions of this Agreement.  Members  may, but
shall not be obliged to, implement in their law more extensive protection than is
required by this Agreement , provided that such protection does not contravene the
provisions of this Agreement. … " (emphasis added)
6.87 Article 1.1 confirms that the TRIPS Agreement is a minimum standards agreement in respect
of intellectual property rights.  Under Article 1.1, Members may, but are not obligated to, implement a
more stringent standard for the protection of intellectual property rights so long as such measures donot contravene any of the provisions of the TRIPS Agreement .  The textual reading of Article 1.1
suggests that Members are to "give effect" to, inter alia , Article 33 which obligates Members to make
available a term of protection for patents that does not end before 20 years from the date of filing.
6.88 By making available a term of protection that runs 17 years from the date of grant for those
patents that were filed before 1 October 1989, Section 45 of Canada's Patent Act,  on its face, does not
meet the minimum standard of Article 33 in all cases.  This is confirmed by the figures presented by
Canada which show that there were still exta nt, as of 1 January 2000, approximately 66,936 Old Act
patents, representing approximately 40 per cent of the total 169,966 Old Act patents, that would
expire before 20 years from the date of filing.
44  It is irrelevant that a "very large number of" Old Act
patents, representing 60 per cent of all Old Act patents, exceeded the protection term of 20 years fromthe date of filing by two to five years
45 and that 84 per cent of Old Act patents expire in the course of
the nineteenth year following the application date46 because the minimum standard for the term of
protection under Article 33 is 20 years from the date of filing and we agree with the United States
that, pursuant to this minimum standard for term of protection, even if there is only one patent that has
a term of protection that ends before 20 years from the date of filing, Section 45 would be consideredinconsistent with Article 33.
47
6.89 As Article 33 obligates Members to make available a minimum term of protection that does
not end before 20 years from the date of filing and the foregoing statistical figures showing that there
are as many as 66,936 Old Act patents that existed as of the TRIPS  application date, and were still in
existence on 1 January 2000, that would expire before 20 years from the date of filing despite
                                                                                                                                                                    
41 Article 18 of the TRIPS Agreement  provides that "[i]nitial registration, and each renewal of
registration, of a trademark shall be for a term of no less than seven years."
42 Article 26.3 of the TRIPS Agreement , in relation to industrial designs, provides that "[t]he duration of
protection available shall amount to at least 10 years."
43 Article 38 of the TRIPS Agreement , in relation to layout-designs of integrated circuits, provides in
paragraph 1 that in some cases the term of protection "shall not end before the expiration of a period of 10years" counted from a particular date and paragraph 2 provides that in other cases layout-designs "shall beprotected for a term of no less than 10 years" from a particular date.
44 Canada's First Submission, para. 45.
45 Canada's First Submission, para. 42.
46 Canada's First Submission, para. 43.
47 The United States referred to a well-known antidepressant drug as evidence of a patent that expired
before 20 years from the date of filing.  The United States pointed out that the Canadian patent for that drugexpired in August 1999 under the term of protection provided by Section 45 whereas it would not have expireduntil October 2000 if the term of protection ran until 20 years from the date of filing as required by Article 33 of
the TRIPS Agreement .  See U.S. Exhibit 2.WT/DS170/R
Page 22
payment of all maintenance fees, we find on a preliminary basis that Section 45 is inconsistent with
Article 33 of the TRIPS Agreement .48
(b) Consideration of Canada's equivalence argument
(i) The term of "effective" protection or "exclusive privilege and property rights"
6.90 Canada advanced the argument that Section 45 is in conformity and harmonious with
Article 33 on the basis that 17 years of "effective" protection for the "exclusive privilege and property
rights" conferred by Old Act patents are "equivalent or superior" to the term of "exclusive privilege
and property rights" provided by Article 33 of the TRIPS Agreement .49  Canada made such assertion
based on the fact that the time-period between the filing date and issuance of patent necessarily erodes
the term of patent protection in cases where, as in Article 33, the protection period is measured as of
the filing date.50  Since the time-period between the filing date and issuance of patent is on average
five years in Canada, it was Canada's contention that a patent right holder will receive only 15 yearsof "exclusive privilege and property rights" under a system that grants a 20-year protection term as of
the filing date whereas Section 45 provides a successful patent applicant with 17 years of constant
protection for the "exclusive privilege and property rights".
                                                     
48 The United States argued that Article 31(3)(b) of the Vienna Convention  allows treaty interpreters to
take into account "subsequent practice"  to "establish the agreement of the parties regarding its interpretation"
and referred to six developed country Members, including itself, that amended their laws to implement the
TRIPS Agreement .  In connection with "subsequent practice", the Appellate Body stated in Japan – Alcoholic
Beverages  that "the essence of subsequent practice in inte rpreting a treaty has been r ecognized as a 'concordant,
common and consistent' sequence of acts…which is sufficient to establish a discernable pattern implying theagreement of the parties regarding its interpretation."  For the purpose of this dispute, we do not consider it
necessary to make a finding as to whether there is "subsequent practice" to determine the requirement under
Article 33 of the TRIPS Agreement  and to ascertain whether Section 45 of Canada's Patent Act is in conformity
with Article 33.
49 We note Canada's argument that the partie s to the North American Free Trade Agreement
("NAFTA") accepted the substantive equivalence of the protection offered by two types of protection term.  Therelevant NAFTA provision cited by Canada states that "[e]ach party shall provide a term of protection forpatents of at least twenty years from the date of filing or seventeen years from the date of grant."  We do not
consider that the NAFTA provision m eans that Section 45 of the Canadian Patent Act  and Article 33 of the
TRIPS Agreement  have substantive equivalence of protection.  In this regard, we note that the Panel in United
States — Restrictions on Imports of Tuna , GATT Doc. DS29/R, 20 May 1994 (unadopted), stated, in relation to
Article 31.3(a) of the Vienna Convention , the following:
"The Panel recalled that the Vienna Convention provides for a general rule of interpretation
(Article 31) and a supplementary means of interpretation (Article 32).  The Panel first
examined whether, under the general  rule of interpretation of the Vienna Convention, the
treaties referred to might be taken into account for the purposes of interpreting the GeneralAgreement.  The general rule provides that "any subsequent agreement between the partiesregarding the interpretation of the treaty or the application of its provisions" is one of theelements relevant to the interpretation of a treaty.  However the Panel observed that the
agreements cited by the parties to the dispute were bilateral or plurilateral agreements that
were not concluded among the contracting parties to the General Agreement, and that they didnot apply to the interpretation of the General Agreement or the application of its provisions.Indeed, many of the treaties referred to could not have done so, since they were concludedprior to the negotiation of the General Agreement.  The Panel also observed that under thegeneral rule of interpretation in the Vienna Convention account should be taken of "any
subsequent practice in the application of the treaty which established the agreement of the
parties regarding its interpretation."  However, the Panel noted that practice under the bilateraland plurilateral treaties cited could not be taken as practice under the General Agreement, andtherefore could not affect the interpretation of it.  The Panel therefore found that under thegeneral rule contained in Article 31 of the Vienna Convention, these treaties were not relevantas a primary means of interpretation of the text of the General Agreement."
50 Canada's First Submission, para. 74;  Canada's Response to Panel Question 21.WT/DS170/R
Page 23
6.91 Canada claimed that since the time-period between the filing date and patent issuance date
varies, the patent term of protection as contempl ated by Article 33 is not a fixed minimum period of
20 years but "a variable period of less than 20 years".51  Canada stated that the  TRIPS  negotiators were
aware that the period of protection would be "a variable period of less than 20 years" based on the fact
that Article 62.2 requires procedures for the grant or registration of intellectual property rights takeplace "within a reasonable period of time so as to avoid unwarranted curtailment of the period of
protection."
6.92 There is no textual or contextual support for Canada's interpretation that Article 33 of the
TRIPS Agreement  requires Members to provide patent right holders with a term of  "effective"
protection or "exclusive privilege and property rights".  The plain language of Article 33 states that
the "term of protection available shall not end before the expiration of a period of twenty years
counted from the filing date."  To construe the language provided in Article 33 to mean a term of"effective" protection or "exclusive privilege and property rights" would require the treaty interpreter
to read into the text words that are not there
52 and would be, as noted by the Appellate Body in
Japan -  Alcoholic Beverages ,53 contrary to the rule that  "interpretation must be based above all upon
the text of the treaty".54  Canada's interpretation would engender unreasonable results that would
allow a term of  protection for patents that ends before 20 years from the date of filing to be inconformity with Article 33.
6.93 Canada also argues that it could maintain its Old Act term of protection of 17 years from the
date of grant in implementing the TRIPS Agreement  based on the freedom afforded to each Member
by Article 1.1 "to determine the appropriate method of implementing the provisions of [the]
Agreement within their own legal system and practice."  Canada makes this argument because, in itsview, the relevant "provisions of [the] Agreement" in this case only require a variable period of
effective protection, which can be ascertained through a combined interpretation of Articles 33
and 62.2, and which overrides obligations concerning the dates of commencement or expiry.
6.94 We take a different view.  Article 33 contains an obligation concerning the earliest available
date of expiry of patents, and Article 62.2 contains a separate obligation prohibiting acquisitionprocedures which lead to unwarranted curtailment of the period of protection.  We recognize that
some curtailment is permitted by the text of these two provisions.  However, Article 1.1 gives
Members the freedom to determine the appropriate method of implementing those two specific
requirements, but not to ignore either requirement in order to implement another putative obligation
concerning the length of effective protection.
6.95 Furthermore, Article 62.2 does not support Canada's argument that its obligation is to make
available a term of protection equivalent in overall length to a variable term of real or effectiveprotection under the 20 years from the date of filing "formula".  Paragraph 2 of Article 62 only deals
with the "acquisition" of an intellectual property right and procedures for "grant or registration",
which all refer to the commencement of the available period of protection and not to its expiry date.
It recognizes some curtailment of the term of pr otection may occur due to a later commencement date,
but not a reduction at any other point in that period, including its expiry.  This applies a fortiori  in
light of the express requirement in Article 33 concerning the date of expiry.  Canada also referred to
paragraphs 1 and 4 of Article 62 which provide for procedures that can terminate protection of
particular inventions, through default in payment of maintenance fees, revocation and cancellation,
                                                     
51 Canada's First Oral Statement, para. 17;  Canada's Second Oral Statement, para. 16.
52 Appellate Body Report, India - Quantitative Restrictions on  Imports of Agricultural, Textile and
Industrial Products , WT/DS90/AB/R, adopted 22 September 1999, para. 94;  Appellate Body Report, EC -
Measures Concerning Meat and Meat Products (Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted
13 February 1998, para. 181.
53 supra  footnote 14, p. 11.
54 [footnote original] Territorial Dispute (Libyan Arab Jamahiriya/Chad) , Judgment , (1994) I.C.J.
Reports, p. 6 at 20; Maritime Delimitation and Territorial Questions  between Qatar and Bahrain, Jurisdiction
and Admissibility , Judgment , (1995) I.C.J. Reports, p. 6 at 18.WT/DS170/R
Page 24
prior to expiry of the available term.55  As such, those are precisely the procedures that are implied by
the use in Article 33 of the word "available" and which are to be discounted in evaluation of the
available term of protection.  We therefore find that Canada's defence based on "equivalence" of
terms has not displaced our finding that Section 45 is inconsistent with Article 33.
(ii) "Normal or average" pendency period
6.96 Canada referred to the "average" pendency period for New Act patents in support of its
argument that the "effective" period of protection made available by Section 45 is equivalent or
superior to the term of protection made available by Article 33 of the TRIPS Agreement .56  W e
appreciate that this, together with the factors mentioned by both parties in their respective replies to
question 1 from the panel, may assist us in the in terpretation of the phrase "unwarranted curtailment"
of the term of protection in Article 62.2.  However, in view of our findings in paragraphs 6.94
and 6.95, we do not need to decide what would constitute such an "unwarranted curtailment".
6.97 We note that Canada referred to statistics as to the average length of pendency periods of Old
Act patents, which we have quoted at paragraphs 2.6 to 2.11 of this Report, according to which
approximately 60 per cent of Old Act patents and patent applications both at 1 October 1996 and
again at 1 November 1999 had an available term expiring later than required by Article 33, while
approximately 40 per cent did not.  We also note th at Canada emphasized that it did not argue that
Section 45 was consistent with Article 33 of the TRIPS Agreement  on the basis that an overall average
of the terms of protection of Old Act patents and patent applications in force on the date of application
of the TRIPS Agreement  met the minimum standard of Article 33.57  Nevertheless, we find it useful in
the following paragraphs to dispel any notion that  average figures can be used to maintain the
equivalence argument, especially in view of the fact that Canada relies on the average pendencyperiod of New Act patents to support its argument that the term of protection available under
Section 45 is equivalent or superior to the term of protection made available in Article 33 and further
in light of the fact that Canada uses the average pendency period of two to four years of Old Act
patents to make the same claim in relation to Article 33.
6.98 We are mindful that the Panel in United States - Section 337 of the Tariff Act of 1930  rejected
"any notion of balancing more favourable treatment…against less favourable treatment" and its
statement that more favourable treatment is only relevant to the extent that it always offsets
differential treatment causing less favourable treatment.
58  Specifically, the Panel:
"…rejected any notion of balancing more favourable treatment of some imported
products against less favourable treatment of other imported products.  If this notion
were accepted, it would entitle a contracting party to derogate from the no less
favourable treatment obligation in one case, or indeed in respect of one contractingparty, on the ground that it accords more favourable treatment in some other case, or
to another contracting party.  Such an interpretation would lead to great uncertainty
about the conditions of competition between imported and domestic products and
thus defeat the purposes of Article III."
59
6.99 Disparate pendency periods exist among patents because the examination period required to
review the criteria set forth in Article 27.1 for patentability varies from one field of technology to
another.  This variance also exists in Canada where the patent authority "normally took…two to four
years to complete the examination process."60  Based on simple arithmetic, if an Old Act patent took
                                                     
55 Canada's Response to Panel Question 29.
56 Canada's First Submission, paras. 78 and 81;  Canada's First Oral Statement, paras. 22 and 26.
57 Canada's Response to Panel Question 21.
58United States - Section 337 of the Tariff Act of 1930 , BISD 36S/345, adopted 7 November 1989,
paras. 5.14 and 5.16 (" United States - Section 337 ").
59United States - Section 337 , para. 5.14.
60 Canada's First Submission, para. 72.WT/DS170/R
Page 25
two years to issue, its term of protection measured  as of the date of filing would end 19 years, as
opposed to 20, from the date of filing, which is the earliest available expiry date required by
Article 33.  To meet the standard enunciated in United States - Section 337 , all Old Act patents would
have to have a term of protection that did not end before 20 years from the date of filing.  It cannot be
assumed that all Old Act patents had a pendency period of three years or longer and therefore a termof protection that did not end before 20 years from the date of filing because an average  figure of two
to four years necessarily embraces shorter periods which result in patents with a term of protection
that ends before 20 years from the date of filing.  In fact, the parties agree that many Old Act patents,
including many still in force, will expire before 20 years from the date of filing.
61
6.100  Thus, even if Article 33 could be construed to allow Members to make available a term of
"effective" patent protection or "exclusive privilege and property rights", we do not find tenable any
argument that Section 45 made available a term equivalent or superior to the available term ofprotection mandated by Article 33 on the basis of an average pendency period and resultant expiry
date of protection made available by Section 45.  In relation to the equivalence argument, we find that
the term of protection under Section 45 is inconsiste nt with the minimum standard of Article 33 of the
TRIPS Agreement  because, within the calculation of the average period of effective protection, there
are Old Act patents with a term of protection that ends before 20 years from the date of filing.
(c) Consideration of Canada's "availability" argument
6.101  In determining whether Canada made available a term of protection that does not end before
20 years from the date of filing, we first examine th e ordinary meaning of the word "available" in its
context.  We then consider whether the suggested delays result in "unwarranted curtailment" under
Article 62.2 and constitute "unnecessarily complicated or costly" procedures under Article 41.2 whichis incorporated by reference in Article 62.4.  Subsequently, we evaluate the merit of Canada's
argument that a term of protection that does not end before 20 years from the date of filing was
available prior to the date of entry into force of the TRIPS Agreement  in Canada.
(i) Whether a term of protection that does not end before 20 years from the date of filing was
"available" under Section 45 of Canada's Patent Act
6.102  As a treaty interpreter's obligation is to first interpret the text based on its ordinary meaning
within its context and object and purpose, the ordinary meaning of the word "available" as it is used in
Article 33 is first considered.  Black's Law Dictionary  defines the word "available" as "having
sufficient force or efficacy;  effectual;  valid"
62 and the word "valid" in turn means "having legal
strength or force…incapable of being rightfully overthrown or set aside."63  The dictionary meaning
of the word "available" would suggest that patent right holders are entitled, as a matter of right , to a
term of protection that does not end before 20 years from the date of filing.
6.103  We first note Canada's explanation that a patent applicant could obtain informal delays by
simply asking the examiner to "retard the position of a particular application in the queue of those
applications waiting examination."64  These informal delays, according to Canada, were granted at the
discretion of the patent examiner65 without exception.  Based on Canada's argument, a patent
applicant would be required to resort to delay tactics to obtain the TRIPS  mandated term of protection
that does not end before 20 years from the date of filing.  Although Canada stated that such delay
requests have never been refused, it is apparent that the patent examiner had the discretionary
authority to grant or not grant the necessary delay so  as to allow a patent applicant to prolong the term
of patent protection that does not end before 20 years from the date of filing.  In short, these informal
delays were not granted to Old Act patent applicants as a matter of right.
                                                     
61 See paragraphs 2.8 and 2.10.
62 Black's Law Dictionary  (West Publishing Co., 1979), p. 123.
63 Ibid. , p. 1390.
64 Canada's Response to Panel  Question 31(a).
65 Canada's Response to Panel Question 31(b).WT/DS170/R
Page 26
6.104  Canada argued that, as an alternative to informally asking for delays from a patent examiner,
there are statutorily mandated delays which a patent applicant can use to obtain a protection term of
20 years from the date of filing.66  According to Canada, Section 30(1) provides for 12 months to
complete an application after filing and six months to prosecute the application after a notice that an
examiner has taken action.  An application is d eemed abandoned if these two deadlines are not met.
Section 30(2) allowed an applicant a further delay by providing a period of 12 months to have an
abandoned application reinstated.  When 12 months for completing an application, another 12 months
for reinstatement in the event of failure to complete an application within the time-limit, six months
for the prosecution of the application and a further 12 months for reinstatement of the application in
case of failure to prosecute within the six-month period are added, the total period of delay is
42 months, or 3.5 years.
6.105  A second statutory delay is available under Section 73 of the Old Act.  That section provides
a period of up to six months to pay the prescribed fees in a notice of allowance on penalty of
forfeiture.  A forfeited application can, on the payment of prescribed fees, be restored within six
months of an initial act of default in timely payment.  Thus, another year of delay is available from the
date of filing.  When the delays available under Sections 30 and 70 are added to the 17-year term of
protection for patents, the total delay amounts to a statutorily available term of 21.5 years from thedate of filing.  The total period of delay of 54 months does not include the time required for a patent
examiner to complete the examination of the application and additional delays that may result from
request for further information.
6.106  Based on the statutory delays under Sections 30(2) and 73, a patent applicant would actually
have to abandon his application, reinstate the abandoned application and then again forfeit theapplication and then reinstate it again for the third time to obtain the TRIPS  mandated term of
protection that does not end before 20 years from the date of filing.  Since the patent applicant cannot
know the time-period required for the examination of the patent application by an examiner, the
applicant cannot be certain about how many times the application would have to be abandoned to
obtain a term of protection that does not end before 20 years from the date of filing.
6.107  It is apparent from the statutory text that the power to reinstate an abandoned application
under Section 30(2) was only available where the applicant's failure to meet the deadlines of the
Old Act "were not reasonably avoidable".  Canada admits that the Commissioner of Patents could
have refused to reinstate an application where an applicant revealed that his motive in not meeting the
deadlines of the Old Act was to delay issuance of the patent to obtain a term expiring 20 years from
the date of filing.  Such an applicant was therefore effectively required to conceal his motive and to
state another explanation for his failure to meet the deadlines in order to be entitled to reinstatement ofthe application.  Nonetheless, Canada stated that no such request for reinstatement was ever refused.
6.108  The use of the word "may" in the statutory text of Section 73 indicates that the Commissioner
of Patents had a discretion to reinstate forfeited applications, which he could refuse to exercise in
certain circumstances.
67
6.109  We find that the discretionary nature of both a patent examiner's authority to grant informal
delays as well as the Commissioner's power to grant statutory delays so as to allow patent applicants
to obtain a term of protection that does not end before 20 years from the date of filing does not make
available, as a matter of right, to patent applicants a term of protection required by Article 33.
6.110  In addition to the interpretation that patent righ t holders are entitled to the term of protection
for patents that does not end before 20 years from the date of filing under Article 33 of the TRIPS
Agreement , we note that the respective use and omission of the word "available" in other provisions
                                                     
66 Canada's First Oral Statement, para. 42.
67 We deal with Canada's argument that there was no real discretion under Section 73 at
paragraph 6.118.WT/DS170/R
Page 27
on terms of protection throughout the Agreement provides a plausible contextual explanation for its
use in Article 33.  In our view, the word "available" in Article 33 probably reflects the fact that patent
right holders must pay fees from time to time to maintain the term of protection and that patent
authorities are to make those terms "available" to patent right holders who exercise their right to
maintain the exclusive rights conferred by the patent.  Such interpretation is supported by Article 26of the TRIPS Agreement , which governs the term of protection of industrial designs, and which uses
the word "available" to reflect the fact that right holders of industrial designs in some Members must
pay maintenance fees to maintain the term of protection whereas "available" is not used in Article 18
in connection with the term of protection of trademarks because the seven-year term of protection
refers to the initial term of registration during wh ich time there is no need for the right holder of a
trademark to pay fees to renew or maintain the protection term.  Article 38.1 concerning the term of
protection in respect of layout-designs requiring registration does not contain the word "available"because the ten-year protection term does not require right holders to renew or maintain the protection
term during that ten-year period.  Similarly, the word "available" is not used in respect of terms of
protection governing copyright and related rights and layout-designs not requiring registration as a
condition for protection because there are no formal requirements to obtain protection.
6.111  In light of the various reasons set out above, we confirm our finding that a term of protection
that does not end before 20 years from the date of filing is not available under Section 45 of Canada's
Patent Act  and is therefore inconsistent with Article 33 of the TRIPS Agreement .
(ii) Whether resorting to informal and statutory delays is consistent with Article 62
6.112  In light of the fact that Canada argued that a patent term of 17 years from grant could be
considered consistent with Article 33 in view of the provisions on acquisition and maintenanceprocedures contained in Part IV of the TRIPS Agreement  that enable a certain amount of delay in
granting rights, we are of the view that the procedures on which Canada relies should also be assessed
in relation to Part IV of the TRIPS Agreement  which applies to patents granted after the date of
application of the Agreement for the Member in question.
6.113  In addition to lacking textual support and imputing words and concepts that were not
intended, requiring applicants to resort to the suggest ed delays to obtain a term of protection that does
not end before 20 years from the date of filing also defeats the notion of promoting prompt and
diligent prosecution and examination of patents as encapsulated in Articles 33, 62.1 and 62.4.
6.114  Article 62.1 provides:
"Members may require, as a condition of the acquisition or maintenance of the
intellectual property rights provided for under Sections 2 through 6 of Part II,
compliance with reasonable procedures  and formalities.  Such procedures and
formalities shall be consistent with the provisions of this Agreement."  (emphasis
added)
6.115  While it may be true in many cases that an applicant can procure a term of protection that
does not end until 20 years from the date of filing by resorting to procedural delays, the types of
procedural delays Canada described do not seem to constitute reasonable procedures because they arenot tied to valid reasons required to ensure a proper examination but are rather purely related to
artificially fulfilling the requirement of Article 33.  In our view, requiring applicants to resort to
delays such as abandonment, reinstatement, non-payment of fees and non-response to a patent
examiner's report for the purpose of simply obtaining a term of protection that does not end before
20 years from the date of filing would constitute unreasonable procedures that are inconsistent withCanada's obligation under Article 62.1.WT/DS170/R
Page 28
6.116  Turning to Article 62.4, we note that it provides:
"Procedures concerning the acquisition or maintenance of intellectual property
rights…shall be governed by the general principles set out in paragraphs 2 and 3 of
Article 41."
Paragraph 2 of Article 41 provides:
"Procedures concerning the enforcement of intellectual property rights shall be fair
and equitable.  They shall not be unnecessarily complicated or costly , or entail
unreasonable time-limits or unwarranted delays ."  (emphasis added)
6.117  In our view, requiring applicants to resort to delays such as abandonment, reinstatement,
non-payment of fees and non-response to a patent examiner's report would be inconsistent with the
general principle that procedures not be unnecessarily complicated as expressed in Article 41.2 and
applied to acquisition procedures by Article 62.4.  By their very nature, the delays, which are not tiedto any valid reason related to the examination and grant process, would be inconsistent with the
general principle that procedures not entail "unwarranted delays" as expressed in Article 41.2 and
applied to acquisition procedures by Article 62.4.
6.118  We noted in paragraphs 6.107 and 6.108 above that the Commissioner's powers to reinstate
and restore applications under Section 30(2) and Section 73 were discretionary at all material timesand not available as a matter of right to patent applicants. Canada argued, however, that despite the
use of the word "may" in Section 73, the payment of the necessary fee enabled the applicant to obtain
reinstatement of his patent application as a matter of right.  In other words, had the Commissioner
exercised his discretion to refuse an application for reinstatement, an applicant would have been
required to pay an additional fee and pursue legal proceedings against the Commissioner in a court oflaw in order for a term of protection expiring 20 years from the date of filing the application to be
available.  We find potential requirements that an applicant commence proceedings for a writ of
mandamus and pay additional fees to be in breach of the general principle that procedures not be
"unnecessarily complicated or costly" as expressed in Article 41.2 and applied to acquisition
procedures by Article 62.4.
6.119  A patent applicant should not be expected to resort to procedural tactics that produce results
inconsistent with Article 62.1 and 62.4 in order to ensure its rights pursuant to Article 33. As such,
these procedures cannot be relied upon in order to defend a claim of violation of another Article of the
Agreement.
(iii) Whether a term of protection that does not end before 20 years from the date of filing can be
made "available" in accordance with Article 33 prior to the date of application of the TRIPS
Agreement
6.120  It is agreed that this dispute only concerns patents which were granted prior to
1 October 1992 as any Old Act patents granted later w ould be entitled to a longer term of protection
than the TRIPS Agreement  requires (see paragraph 6.6 above).  Given that Canada's argument that the
requisite patent term was "available" hinges on procedures prior to the grant of a patent, it is apparent
that the alleged availability is referable to the options available to patent applicants prior to1 October 1992, i.e., prior to the entry into force of the TRIPS Agreement .  Canada takes the view that,
where Article 33 was applicable to inventions under protection in developed country Members on
1 January 1996, it would be "sufficient if the term [of protection] was available at the time the
application was filed".
68  We do not agree with this view.  According to Article 65.1, Canada became
obligated to apply Article 33 on 1 January 1996.  In our view, no Member can implement anobligation by reference to a state of affairs which ceased to exist in respect of Old Act patents at the
                                                     
68 Canada's Response to Panel Question 33.WT/DS170/R
Page 29
time the obligation to make available a term of protection that does not end before 20 years from the
date of filing became applicable.  Consequently, the alleged availability in Canada prior to
1 October 1992 of a term of protection that complied with the requirement described in Article 33 is
insufficient to discharge Canada's obligation to implement Article 33 from 1 January 1996.
6.121  In the same way, even though Old Act patent applicants prior to 1 October 1992 were able to
obtain a patent term that expired 20 years or more after the date of filing on the basis of informal
delays in the patent prosecution process, and the st atutory procedures of reinstatement and restoration,
they could not have known that they were entitled to have such a term of protection made available to
them because the TRIPS Agreement  had not yet entered into force or even been finalized.  Therefore,
the decision of many of those patent applicants not to seek these delays was made without that
knowledge, and cannot be characterized as a choice to forego the right to a term of protection expiring
later than is required by the TRIPS Agreement .
VII. CONCLUSIONS AND RECOMMENDATION
7.1 In light of the findings above, we conclude that:
(i) the reference to "subject matter…which is protected" on the date of application of the
TRIPS Agreement  in Article 70.2 includes inventions that are currently protected by
patents in accordance with Section 45 and that were protected by patent on1 January 1996, and this is not affected by Article 70.1;  and
(ii) Section 45 of Canada's Patent Act  does not make available a term of protection that
does not end before 20 years from the date of filing as mandated by Article 33.
7.2 The Panel therefore recommends that the Dispute Settlement Body request Canada to bring its
measures into conformity with its obligations under the WTO Agreement.