WORLD TRADE
ORGANIZATIONWT/DS170/AB/R
18 September 2000
(00-3564)
Original: English
CANADA – TERM OF PATENT PROTECTION
AB-2000-7
Report of the Appellate BodyWT/DS170/AB/R
Page i
I. Introduc tion................................................................................................................. ................1
II. Arguments of th e Participants............................................................................................... ......4
A. Claims of Error by Canada – Appellant ........................................................................4
1. Articles 70.1 and 70.2 of the  TRIPS Agreement ...............................................4
2. Article 33 of the  TRIPS Agreement ..................................................................6
B. Arguments by the United States – Appellee ....................................................................9
1. Articles 70.1 and 70.2 of the  TRIPS Agreement ...............................................9
2. Article 33 of the  TRIPS Agreement ................................................................11
III. Issues Raised in this Appeal ............................................................................................... ......14
IV. Order of Analysis........................................................................................................... ...........14
V. Articles 70.1 and 70.2 of the  TRIPS Agreement ......................................................................14
VI. Article 33 of the  TRIPS Agreement .........................................................................................24
VII. Findings and Conclusions................................................................................................... ......29WT/DS170/AB/R
Page 1
WORLD TRADE ORGANIZATION
APPELLATE BODY
Canada – Term of Patent Protection
Canada,  Appellant
United States,   AppelleeAB-2000-7
Present:Lacarte-Muró,  Presiding Member
Bacchus,  MemberGanesan,  Member
I. Introduction
1. Canada appeals from certain issues of law and legal interpretations developed in the Panel
Report in  Canada – Term of Patent Protection  (the "Panel Report").1  The Panel was established to
consider claims made by the United States that the term of patent protection provided in Canada's
 Patent Act2 is inconsistent with Canada's obligations under Articles 33 and 70 of the  Agreement on
Trade-Related Aspects of Intellectual Property Rights  (the " TRIPS Agreement ").
2. The measure at issue in this dispute is Section 45 of Canada's  Patent Act .  Before
1 October 1989, Canada provided patent protection for a term of seventeen years from the date ofgrant of a patent.  Canada changed the law, with effect from 1 October 1989, to provide patentprotection for a term of twenty years from the date of filing of the application for a patent.  However,no mechanism was provided in the legislation to allow for conversion from one system to the other.
3
Consequently, Section 44 of the  Patent  Act establishes the new rule for applications filed after 1
October 1989, while Section 45 maintains the seventeen year from grant rule for patent applications
filed before 1 October 1989.4
                                                     
1WT/DS170/R, 5 May 2000.
2Canadian  Patent Act , R.S.C., 1985, c.P-4, s.45.  For more detailed discussion of the measure, see
paras. 2.1-2.11 of the Panel Report.
3Panel Report, para. 2.4.
4By virtue of Section 27 of An Act to Amend the Patent Act and to Provide for Certain Matters in
Relation Thereto , 17 November 1987, see paras. 2.2-2.5 of the Panel Report.WT/DS170/AB/R
Page 2
3. Sections 44 and 45 of Canada's  Patent Act  read as follows:
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 thefiling 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.
4. Thus, Section 44 provides for a term of twenty years from the date of  application  for a patent
for patent applications filed on or after 1 October 1989, while Section 45 provides for a term ofseventeen years from the date of  grant  of a patent for patent applications filed before that date.
Patents which are subject to Section 44 are commonly described in Canada as "New Act patents",
while those subject to Article 45 are described as "Old Act patents".  The Old Act patents are the
subject of this dispute.
5. In accordance with Article 65.1 of the  TRIPS Agreement , on 1 January 1996, the  TRIPS
Agreement  became applicable for Canada. According to statistics provided by Canada, and
uncontested by the United States, on 1 October 199 6, 93,937 or just under 40 per cent of Old Act
patents then in existence had terms that would, su bject to the continued payment of the requisite
maintenance fees, expire in less than twenty years measured from their respective application dates.
6
Furthermore, 66,936 or just under 40 per cent of these Old Act patents that were still in force on1 January 2000 will, subject to the payment of annual maintenance fees, expire in less than
twenty years measured from their respective application dates.
7
                                                     
5Section 46 provides for the payment of maintenance fees to maintain the rights accorded by a patent
once it has been issued.  It further provides for the deemed expiry of the patent where those fees are in default.See Canada's appellant's submission, para. 11, footnote 9.  See also Panel Report, para. 2.1, footnote 5.
6Panel Report, para. 2.7.
7Ibid., para. 2.9.WT/DS170/AB/R
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6. In the Panel Report, circulated to WTO Members on 5 May 2000, the Panel concluded 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 inaccordance with Section 45 and that were protected by patents
on 1 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 thedate of filing as mandated by Article 33.
8
7. The Panel, therefore, recommended that the Dispute Settlement Body (the "DSB") request
Canada to bring its measures into conformity with its obligations under the  Marrakesh Agreement
Establishing the World Trade Organization  (the " WTO Agreement ").9
8. On 19 June 2000, Canada notified the DSB of its decision to appeal certain issues of law
covered in the Panel Report and certain legal interpretations developed by the Panel, pursuant toArticle 16.4 of the  Understanding on Rules and Procedures Governing the Settlement of Disputes
(the "DSU"), and filed a Notice of Appeal with  the Appellate Body pursuant to Rule 20 of the
Working Procedures for Appellate Review  (the " Working Procedures ").
10  On 29 June 2000, Canada
filed an appellant's submission.11  The United States filed an appellee's submission on 14 July 2000.12
On 25 July 2000, at the request of the Appellate Body Division hearing the appeal, the participantssubmitted additional memoranda on certain issues of legal interpretation arising under Articles 70.1and 70.2 of the  TRIPS Agreement .
13  The Division afforded each participant an opportunity to
respond to the additional memoranda submitted by the other participant.14
9. The oral hearing in the appeal was held on 1 August 2000.15  The participants presented oral
arguments and responded to questions put to them by Members of the Division hearing the appeal.
                                                     
8Panel Report, para. 7.1.
9Ibid., para. 7.2.
10WT/DS170/4, 19 June 2000.
11Pursuant to Rule 21 (1) of the Working Procedures .
12Pursuant to Rule 22 (1) and Rule 23(3) of the Working Procedures .
13Pursuant to Rule 28.1 of the Working Procedures .
14Pursuant to Rule 28.2 of the Working Procedures .
15Pursuant to Rule 27 of the Working Procedures .WT/DS170/AB/R
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II. Arguments of the Participants
A. Claims of Error by Canada  – Appellant
1. Articles 70.1 and 70.2 of the  TRIPS Agreement
10. Canada appeals the finding of the Panel that the "non-retroactive application rule"16 contained
in Article 70.1 of the  TRIPS Agreement , with respect to "acts" which occurred prior to the date of
application of the  TRIPS Agreement  for a Member, does not override the rule in Article 70.2 of the
TRIPS Agreement , with respect to existing "subject matter" which was protected on the date of
application of the Agreement for the Member in question.  Canada appeals the Panel's conclusion thatCanada is required to apply the obligation under Article 33 to inventions which, on 1 January 1996,the date of application of the TRIPS Agreement  for Canada, were protected by patents, even though
these patents were the result of acts of grant that occurred prior to 1 January 1996.
11. Canada relies on Article 28 of the  Vienna Convention on the Law of Treaties  (the " Vienna
Convention ")
17 which provides that a treaty's provisions do not operate to bind a party in relation to
any act, fact or situation which pre-dates the treaty's entry into force for that party.  In the view ofCanada, Article 70.1 of the  TRIPS Agreement  confirms the non-retroactivity rule of Article 28 of the
Vienna Convention , while the remaining paragraphs of Article 70 "variously amplify or modify the
general rule" set out in Article 70.1, in order to address the special circumstances that negotiators of
the  TRIPS Agreement  anticipated would be encountered in bringing the Agreement into effect.
18
12. Canada recalls that in its submissions before the Panel, Canada argued that the obligation in
Article 33 of the  TRIPS Agreement  is activated by both the  act of filing a patent application and the
 act of granting the patent itself.  The obligation in Article 33 is an obligation to provide a term of
patent protection  measured from the date of filing the patent application.  The term of protection isactivated by the act of filing and is created by the act of grant of the patent.  The term of protection is,thus, an integral part of these two acts.  Canada submits that the  TRIPS Agreement  does not give rise
to obligations that flow from the acts of filing an application for, or of granting, a patent, where those
acts occurred prior to 1 January 1996.
13. Canada further submits that the Panel erred in its interpretation by failing to consider the
contextual relationship between Articles 70.1 and 70.2 of the  TRIPS Agreement .  According to
Canada, a contextual interpretation of Articles 70.1 and 70.2 would reveal that both Articles address
                                                     
16Canada's appellant's submission, para. 2.
17Done at Vienna, 23 May 1969, 1155 U.N.T.S . 331;  8 International Legal Materials 679.
18Canada's appellant's submission, para. 220.WT/DS170/AB/R
Page 5
obligations to which the  TRIPS Agreement  either does or does not give rise.  When the two Articles
are read together, it is clear from their ordinary meaning and the "excepting language" of Article 70.2that the obligations to which the  TRIPS Agreement  gives rise preclude any obligations described in
Article 70.1.
19
14. Canada also submits that in presenting its argument to the Panel, Canada addressed the
distinction between Articles 33 and 28 of the  TRIPS Agreement , in order to explain the manner in
which Article 70.1 operates to exclude the obligations imposed by the latter provision but not the
former.  Canada contends that Article 70.1 has no application to Article 28 because, unlike Article 33,
which addresses the "term" of protection, and is, therefore, attached to the "acts" of filing and grant,the rights conferred by Article 28 flow merely from the fact that the patent exists.  Canada considersthat in rejecting these arguments on the ground that Canada had advanced no evidence in support ofthem, the Panel erred by treating the arguments, which relate solely to a question of law, aspropositions of fact.
15. Canada considers that the Panel erred further in its finding that Canada's argument, if correct,
would nullify Articles 70.6 and 70.7 of the  TRIPS Agreement .  According to Canada, the error stems
from the Panel's misconception that Canada was arguing that patents granted prior to 1 January 1996
were not subject to any of the obligations of the  TRIPS Agreement .  Canada states that Article 70.6
applies to authorizations granted by a government for the use of patent rights without the owner's
authorization. Article 70.6 specifically provides that Articles 31 and 27.1 do not apply to suchauthorizations granted before the  TRIPS Agreement  became known, a date which, in Canada's view,
is "generally accepted to be 20 December 1991,  when the Dunkel Draft of the  TRIPS Agreement  was
released by the GATT Secretariat".
20  Article 70.6 is, thus, a provision clearly intended to be applied
retroactively to the general application date of the  TRIPS Agreement .
16. Canada argues further that the Panel erred by failing to apply the interpretative maxim  lex
specialis derogat legi generali , which stipulates that a general rule such as that in Article 70.1 must
yield to one such as that in Article 70.6, which is more specific.
17. Canada submits that the Panel made the same error with respect to Article 70.7 of the  TRIPS
Agreement .  Article 70.7 applies to patent applications which were pending at the date of application
of the TRIPS Agreement  and provides that such applications may be amended to claim any enhanced
protection provided under that Agreement.  The same interpretative maxim that applies to Article 70.6applies to Article 70.7 as well.  While the act of filing an application is generally exempt from the
                                                     
19Canada's appellant's submission, para. 231.
20Ibid., para. 249.WT/DS170/AB/R
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TRIPS Agreement  under Article 70.1, Article 70.7 provides a specific exception that where an
application is pending on the date of application of the  TRIPS Agreement , such an application can be
amended to claim enhanced protection.  Canada submits that by failing to apply the relevantinterpretative principle, the Panel erred in law.
18. Accordingly, Canada requests the Appellate B ody to reverse the findings and conclusions of
the Panel and find that "the excepting phrase which introduces Article 70.2 subordinates the rule in
that Article to the rule in Article 70.1 in those circumstances where the two rules ostensibly give rise
to obligations in respect of the same act", and, that, as a consequence, the complaint of the
United States is unfounded.
21
2. Article 33 of the  TRIPS Agreement
19. Canada appeals the finding of the Panel that the term of protection provided  under Section 45
of the Canadian  Patent Act  is inconsistent with the minimum standard prescribed in Article 33 of the
TRIPS Agreement .  Canada also appeals the Panel's finding that a term of protection that does not end
before twenty years from the filing date of a patent application is not "available" under Section 45 ofthe Canadian  Patent Act , and that Section 45 is, therefore, inconsistent with Article 33 of the  TRIPS
Agreement .
20. Canada argues that it acknowledged, before the Panel, that the term of protection provided by
Section 45 of its  Patent Act  is different in language, and thus in form, from that prescribed in
Article 33 of the  TRIPS Agreement .  However, Canada considers that the "substantive" or  " effective "
term of protection contemplated by both Section 45 and Article 33 are equivalent, and, therefore,
consistent in substance.
21. According to Canada, both the text and context of the  TRIPS Agreement  contradict the
Panel's finding that there is no textual or contextual support for interpreting Article 33 of the  TRIPS
Agreement  as requiring Members to provide a term of " effective " protection.  Read together,
Articles 31.1 and 31.2 of the  Vienna Convention clearly require that treaty provisions be interpreted
in their context, having particular regard to the treaty's object and purpose.
22. Canada notes that the preamble to the  TRIPS Agreement  declares the purpose of the
Agreement as, inter alia , to promote and provide " effective  and adequate protection" of intellectual
property rights.  Canada submits that further contextual contradictions of the Panel's finding appear inArticle 62.2 of the  TRIPS Agreement , which allows Members to complete their pre-grant procedures
"within a reasonable period of time" so long as this does not lead to an "unwarranted curtailment of                                                     
21Canada's appellant's submission, para. 261.WT/DS170/AB/R
Page 7
the period of protection".  Canada argues that, in drafting the  TRIPS Agreement , the negotiators
understood the effect of the "pendency period" on a term of protection counted from the filing dateand therefore undertook to ensure an effective period or term of protection.  Canada maintains furtherthat the terms of protection elsewhere referred to in the  TRIPS Agreement  as being the minimum
available period are " nominal " terms that are subject to the curtailment which Article 62.2 "expressly
recognizes and condones".
22
23. Canada observes that, having conceded that Article 62.2 of the  TRIPS Agreement  provides
the context for interpreting the term of protection referred to in Article 33, the Panel nevertheless
rejected Canada's contextual interpretation on the ground that Articles 33 and 62.2 create separateobligations:  an obligation to provide a term of patent protection and an obligation not to curtailunreasonably that term, respectively.  The Panel reasoned that Canada's interpretation requires thecreation of a third and distinct obligation, the obligation to provide an effective term of protection.According to Canada, such a characterization miscon strues the Canadian argument, which is that the
two Articles, whatever their form, must be read contextually, and if they are thus read together, theyproduce a substantive result, namely, an " effective " term of protection.  As Section 45 of Canada's
 Patent Act  produces substantively the same result as the  TRIPS Agreement , Section 45 is consistent
with the obligations imposed by the TRIPS Agreement .
24. Canada contends that the related operation of Articles 33, 62.2 and 28 together with
Articles 44, 45.1 and 45.2 of the  TRIPS Agreement  provides further support for Canada's contextual
interpretation.  These latter Articles define the various legal remedies which serve to enforce theexclusive rights conferred by a patent.  Whereas, under Article 33, the term of protection is countedfrom the date of filing, in reality it is not until the patent is actually granted that the exclusive rights
and the attendant enforcement remedies come into play.  Without these rights and remedies, there isno real protection and, consequently, no term of protection.  Canada argues that, in failing to takeaccount of the contextual import of the relationship between these various Articles, "the Panel could
not discover the substantive meaning of what is prescribed" in Article 33 of the TRIPS Agreement .
23
25. Canada argues further that the Panel failed to appreciate the nature and import of the figures
advanced in support of Canada's " equivalence " argument.  In presenting evidence establishing that the
majority of Old Act patents benefited from terms of protection of twenty years or more counted fromthe filing date, Canada merely demonstrated that as  a matter of form, these patents came within the
standard required under Article 33 of the  TRIPS Agreement .  Further, in presenting "pendency
period" statistics in respect of New Act patents, Canada sought to demonstrate, as a matter of                                                     
22Canada's appellant's submission, para. 90.
23Executive Summary of Canada's appellant's submission, p. 6.WT/DS170/AB/R
Page 8
substance, the curtailment of the effective term and its downward variance from the nominal term
referred to in Article 33.  Canada did not argue that averages produce consistency in and ofthemselves, but simply that when viewed against the fixed term available under Section 45, there isconsistency between Section 45 and the variable term of substantive protection available underArticle 33 of the  TRIPS Agreement .
26. Canada submits that Article 33 of the  TRIPS Agreement  makes clear that the critical element
of the obligation it imposes on Members is that the specified term of protection be made  available .
In Canada's view, the ordinary meaning of "available" is "able to be used or obtained".
24  Applying
this meaning to both the language of Section 45 and to the associated practices and proceduresrelating to Section 45 applications plainly demonstrates the  availability  of a term of protection of
twenty years counted from the filing date.
27. Canada recalls that Section 45 of the Canadian  Patent Act  confers a term of protection of
seventeen years from the date a patent is granted.  Canada submits that the actual period between thedate of an originating application and patent expiry depends on the length of time that the "pendencyperiod" adds to the fixed seventeen-year term.  The "pendency period" is taken up by administrativerequirements to which a patent applicant must respond, and the search and examination of the
substance of the application conducted by the Patent Office.  Under the Canadian law, a term of
protection "equal to or greater than" the twenty-year period mentioned in Article 33 of the  TRIPS
Agreement  was invariably "available" to every Old Act applicant because "the system permitted the
applicant to control the pace of the process so as eith er to retard or to accelerate the examination of its
application".
25
28. Canada contends that the evidence shows that an applicant could postpone the processing of
its application by simply asking the Patent Office, which did not refuse such requests, to "retard orbackup its position in the pendency queue".
26  The evidence also shows that an applicant could further
retard the prosecution of its application by simply making full use of the limitation periods prescribed
for the completion of the various statutory steps.  In  such a case, the applicant alone could control and
obtain twenty eight months of "pendency", which was in addition to the "one-to-two year normal
period required by the Patent Office to complete both the search and examination of theapplication".
27  In the extraordinary event that the Patent Office discharged its duties in six months, an
applicant wishing to postpone its application by another six months could default on its issuance fees
                                                     
24Executive Summary of Canada's appellant's submission, p. 7.
25Canada's appellant's submission, para. 124.
26Ibid., para. 125.
27Executive Summary of Canada's appellant's submission, p. 7.WT/DS170/AB/R
Page 9
and then, "as a matter of right, make good on the default at the end of the six month statutory limit in
which to do so".28  Canada argues, therefore, that an applicant who desired such a term could
"prosecute its application" in a manner that made available a term of protection equivalent to that inArticle 33.
29
29. In conclusion, Canada requests that the Appellate Body reverse the findings and conclusions
of the Panel and find that the term of patent protection available under Section 45 of the  Patent Act  is
equivalent to and consistent with the term of protection envisaged by Articles  33 and 62.2 of the
TRIPS Agreement .  Canada also requests the Appellate Body to find that the term of protection
referred to in Article 33 is, and has been, available under the Canadian law and practice relating toSection 45 of the Patent Act .
B. Arguments  by the United States – Appellee
1. Articles 70.1 and 70.2 of the  TRIPS Agreement
30. The United States requests that the Appellate Body reject Canada's appeal and uphold the
finding of the Panel that Section 45 of Canada's  Patent Act  is inconsistent with Article 33 of the
TRIPS Agreement , as made applicable by Article 70.2, to inventions existing and protected by patents
in Canada on 1 January 1996.
31. The United States notes that, according to the Panel, the threshold issue raised by
Articles 70.1 and 70.2 of the  TRIPS Agreement  must first be resolved before any determination
regarding the possible violation of Article 33 of the  TRIPS Agreement  can be made.
32. The United States submits that the Panel correctly found that, contrary to Canada's assertion,
the obligations arising with respec t to existing protected "subject matter" under Article 70.2 are not
eliminated by Article 70.1, which establishes that the obligations of the  TRIPS Agreement  do not
apply to "acts" that occurred prior to 1 January 1996.  The requirement under Article 70.1 with respectto "acts" that occurred prior to the date of ap plication for a Member is not an exception to the
obligations that arise under Article 70.2 with respect to "subject matter existing at the date ofapplication which is protected".  In the view of the United States, these two provisions are separateand distinct.
33. The United States argues that Canada's emphasis of the "interrelationship" between
Articles 70.1 and 70.2, due to their common use of the phrase "give rise to obligations", does not
                                                     
28Executive Summary of Canada's appellant's submission, p. 7.
29Canada's appellant's submission, para. 215.WT/DS170/AB/R
Page 10
detract from the distinction between the two provisions:  that is, one exclusively addresses "acts",
while the other exclusively addresses "subject matter".  When Articles 70.1 and 70.2 are interpretedbased on their ordinary meaning, in their context and in light of the object and purpose of the  TRIPS
Agreement , it is clear that the obligations of the  TRIPS Agreement  apply, for Canada, to protected
"subject matter" in existence on 1 January 1996, but not to "acts" commenced and concluded before1 January 1996.  The United States thus considers that the only relevant question is whether thisdispute involves "existing subject matter" or "acts".
34. In response to this question, the United States concludes that this dispute involves "existing
subject matter" the protection of which will expire before the period provided for in Article 33, andthat, for this reason, Article 70.2, and not Article 70.1, applies.  The United States recalls that thePanel came to this same conclusion when it found that the "reference to 'subject matter . . . which isprotected' 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.
35. The United States notes Canada's argument that "the rights enumerated by Article 28 flow
from the fact that the patent exists and not from the act of grant" but argues that, as is the case withthe obligation under Article 33, the patent from which the rights in Article 28 flow also came into
existence because  of the act of filing a patent application and the Canadian government's act of
granting a patent.  The United States submits that it could just as easily be argued, following the logicof Canada's argument, that the rights of Article 28 are an "integral part" of the acts of filing anapplication and granting a patent.  It could even be argued that every obligation under the  TRIPS
Agreement  can be linked to an act or a series of acts.
30  The United States, therefore, considers that the
distinction Canada attempts to draw among the obligations of the  TRIPS Agreement  to support its
claim that Article 33  alone  is subject to the exception provided by Article 70.1 is arbitrary, and must
be dismissed.
36. The United States challenges Canada's argument  that the Panel erred in finding that Canada’s
arguments would reduce Articles 70.6 and 70.7 of the  TRIPS Agreement  to inutility.  According to
the United States, Article 70.6 is an exception to Article 70.2:  Article 70.6 enumerates twoobligations of the  TRIPS Agreement  that do not apply to a protected subject matter existing on the
date of application for a Member if the unauthorized use was granted by the government before the"date this Agreement became known".  For the interpretative maxim  lex specialis derogat legi
generali  to be applicable, however, there must first be a conflict between the two Articles at issue.
                                                     
30United States' appellee's submission, para. 12.WT/DS170/AB/R
Page 11
When interpreted correctly, there is no conflict betw een Articles 70.1 and 70.6.  In the view of the
United States, the Panel adopted the proper interpretation of the Articles in paragraph 6.48 of thePanel Report.  The United States submits further that there is a strong presumption against conflict ininterpreting treaties.
37. The United States argues that, when interpreted correctly, there is also no conflict between
Article 70.1 and Article 70.7, which permits patent applicants with pending applications on the "dateof application of this Agreement" to amend them so as to "claim any enhanced protection provided
under the provisions of this Agreement".
2. Article 33 of the  TRIPS Agreement
38. The United States also requests that the Appellate Body reject Canada's appeal and uphold the
finding of the Panel that Section 45 of Canada's  Patent Act  is not consistent with Article 33 of the
TRIPS Agreement .
39. The United States notes Canada's "equivalence" argument, namely, that the average term of
protection available to its Old Act patents is equivalent to the obligation created through Articles 33and 62.2 of the  TRIPS Agreement  conjunctively, which, if accepted, would only then require Canada
to provide a patent protection term of fifteen years from the date of grant, regardless of whether this
fifteen-year term expired prior to twenty years counted from the filing date.  The United States argues
that Article 33 states that the term of protection available shall not expire before twenty years countedfrom the filing date, while Article 62.2 separately requires that the term of protection shall not beunreasonably curtailed by procedures for grant or registration that affect the term's commencement.In the view of the United States, the obligations in Articles 33 and 62.2 are two independentobligations that cannot be interpreted conjunctively to create an additional obligation  that overridesthe obligations concerning the dates of commencement or expiry of the term of protection.
40. The United States submits that Canada's argument requires that the Appellate Body ignore the
ordinary meaning of Article 33, which states unequivocally that the term of protection available for a
patent "shall not end before the expiration of a period of twenty years counted from the filing date."
The United States notes Canada's argument that an "equivalence" analysis is necessary andappropriate because "pendency periods" typically and routinely erode the twenty-year period ofprotection referred to in Article 33 and, consequently, the negotiators of the  TRIPS Agreement  must
have intended that an effective period or term of protection be established by looking beyond thenominal term of protection in Article 33.  The United States submits, however, that nothing in the textor context of Article 33 supports Canada's argument that a specific minimum term of protection forpatents is somehow established in the  TRIPS Agreement .  Instead, the twenty-year period mandatedWT/DS170/AB/R
Page 12
by Article 33 serves expressly and unambiguously as "a measuring unit" to determine the earliest date
on which a term of protection of a patent may end without violating the  TRIPS Agreement .
41. The United States argues that Canada's application of Article 31 of the  Vienna Convention  is
inappropriate.  Although Canada correctly states that provisions of the  TRIPS Agreement  must be
interpreted in good faith in accordance with the or dinary meaning to be given to the terms of the
treaty in their context and in light of its object and purpose, Canada misuses Article 62.2 to construeand calculate a patent term of protection that the clear language of Article 33 of the  TRIPS Agreement
does not permit.  The United States acknowledges that Article 62.2 is part of the context of Article 33
because it is part of the text of the  TRIPS Agreement .  However, the United States insists that one
Article of the  TRIPS Agreement  "cannot be used to distort the ordinary meaning of another as Canada
proposes".
31
42. The United States maintains that the Panel correctly rejected Canada's argument that a term of
protection that does not end before twenty years from the date of filing was "available" underSection 45 of Canada’s Patent Act.  The Panel correctly found that the ordinary meaning of the word"available" as used in Article 33 of the  TRIPS Agreement , in light of the object and purpose, suggests
that patent right holders are entitled, as a matter of right, to a term of protection that, in the words of
Article 33, does not end "before the expiration of a period of twenty years counted from the filing
date".
43. The United States submits further that, contrary to Rule 22 of the  Working Procedures ,
elements of Canada's "availability" defence are not directed toward "errors in the issues of law", nordo they involve the Panel’s "legal interpretations".  Rather, they arise seemingly from Canada’sdisagreement with the Panel’s factual findings.  Such arguments are not within the mandate ofArticle 17.6 of the DSU, which makes it clear that "[a]n appeal shall be limited to issues of lawcovered in the panel report and legal interpretatio ns developed by the panel."  The United States
recalls that this limited scope has been further confirmed by the Appellate Body .
32
44. The United States notes Canada's argument that the Panel completely disregarded the factual
evidence before it.  The United States submits that, in making this argument, Canada is merelyquestioning the weight the Panel gave to certain fact ual evidence.  According to the United States, the
Panel discussed the evidence submitted by Canada, but was ultimately not persuaded by Canada'sevidence that postponement requests by Old Act patent applicants were never refused.  The
                                                     
31United States' appellee's submission, para. 19.
32Appellate Body Report,  EC Measures Concerning Meat and Meat Products (Hormones)
WT/DS/26/AB/R, WT/DS48/AB/R, adopted 13 February 1997, para. 132.WT/DS170/AB/R
Page 13
United States submits that the Panel correctly found that the relevant issue was not whether an Old
Act applicant knew ten years after the last Old Act patent was filed that postponement requests weregranted, but whether such applicant knew with certainty at the time he was requesting a postponementthat such a request would be honoured.  Given th e Panel's focus on the real issue of whether an
applicant had a legal right to a postponement, the Panel was justified in giving less weight toCanada’s evidence regarding the history of postponement requests.
45. The United States asserts that Canada is, in effect, claiming that the Panel erred when it relied
on the plain meaning of the text of Canada's law to find that the procedural delays described by
Canada to extend "pendency periods" for Old Act patent applicants might not always be granted as amatter of right, but would instead be subject to the discretion of the Canadian Patent Commissioner.Canada essentially argues that this plain meaning of the text of the Canadian law should be ignored.In presenting this defence, however, Canada fails to establish a justification for its assertion.
46. The United States submits that Canada was obligated, as from 1 January 1996, to make
available a patent term that will not expire until at least twenty years from the filing date.  It isuncontested that this requirement was not made available for all Old Act patents as from that date.Therefore, according to the United States, it does not matter whether a patent applicant might have
been able to manipulate the patent system to obtain a term of twenty years counted from the filing
date.  What matters is that, when Canada had the obligation to make available a term of protectionthat does not end until at least twenty years counted from the filing date for all its Old Act patents, itdid not do so, and it still does not do so.  Thus, the United States submits that the Article 33 benefit isnot "available" for purposes of the  TRIPS Agreement  because Old Act patent holders cannot take
advantage of the benefit any time after the TRIPS Agreement  entered into force for Canada.  In the
view of the United States, for this reason alone, Canada's "availability" argument must fail.
47. Accordingly, the United States requests that the Appellate Body reject Canada's appeal and
uphold the findings of the Panel that Section 45 of the Canadian  Patent Act  is not consistent with
Canada's obligation under Article 33 of the  TRIPS Agreement , as made applicable by Article 70.2 to
inventions existing and protected by patents in Canada on 1 January 1996.WT/DS170/AB/R
Page 14
III. Issues Raised in this Appeal
48. This appeal raises the following issues:
(a) whether the Panel erred in concluding that Article 70.2, and not Article 70.1, of the
TRIPS Agreement  is applicable to inventions protected by Old Act patents on the date
of application of the  TRIPS Agreement  for Canada, and that, therefore, the obligation
in Article 33 to provide a term of protection of not less than twenty years from thedate of filing is applicable to Old Act patents;  and
(b) whether the Panel erred in interpreting and applying Article 33 of the  TRIPS
Agreement  and, in particular, in concluding that Section 45 of Canada's  Patent Act ,
which provides a term of seventeen years from the date of grant for Old Act patents,is inconsistent with Article 33.
IV. Order of Analysis
49. The measure before us in this appeal is Section 45 of Canada's  Patent Act .  As applied by
Canada, and as both parties agree, this measure relates to patents for which the applications were filedbefore 1 October 1989, and which were in force on 1 January 1996, the date on which the  TRIPS
Agreement  became applicable for Canada ("Old Act patents").  As in every appeal, a threshold
question is whether the measure before us falls within the scope of one of the covered agreements, in
this case the  TRIPS Agreement .  For this reason, we begin our analysis of the legal issues raised in
this appeal by considering Article 70, because this Article determines the overall applicability of theobligations of the  TRIPS Agreement , including the obligation found in Article 33, to the measure in
dispute.  Only if we conclude from addressing Article 70 that the measure before us does fall withinthe scope of the  TRIPS Agreement  will it become necessary for us to examine the consistency of
Section 45 of Canada's  Patent Act  with Article 33 of that Agreement.
V. Articles 70.1 and 70.2 of the  TRIPS Agreement
50. Canada appeals the Panel's conclusion that Article 70.2, which addresses "subject matter
existing … and which is protected" on the date of application of the  TRIPS Agreement  for a Member
applies, in the case of Canada, to Old Act patents;  and that Article 70.1, which addresses "acts whichoccurred" before that date, does not.  Canada argues that the patent term obligation in Article 33 is, touse Canada's phrase, an "integral part"
33 of the "act" of filing a patent application and also the "act" of
                                                     
33Oral statement of Canada at the Second Panel M eeting, para. 66, Panel Report, p. 145.  See also
response of Canada to question 37 from the Panel, Panel Report, p. 161.WT/DS170/AB/R
Page 15
granting a patent.  Canada argues that, with respect to Old Act patents, Article 33 thus becomes an
obligation in respect of "acts which occurred" before the date of application of the  TRIPS Agreement
for Canada, and that, because of Article 70.1, the obligation in Article 33 does not apply.  Accordingto Canada, Articles 70.1 and 70.2 are not mutually exclusive, as shown by the "excepting language" atthe beginning of Article 70.2 – "[e]xcept as otherwise provided for in this Agreement … ."
34
51. The Panel rejected Canada's arguments.  Looking first at Article 70.2, the Panel found that
"subject matter existing … and which is protected" at the date of application of the  TRIPS Agreement
for Canada includes  inventions  protected by Old Act patents.  Turning to Article 70.1, the Panel
found that, as the protection accorded under Old Act patents in respect of inventions is a "situationwhich has not ceased to exist" at the date of application of the  TRIPS Agreement  for Canada, this
situation cannot be related to "acts which occurred" before that date and thereby brought within thescope of Article 70.1 of the  TRIPS Agreement .
35  The Panel found that Articles 70.1 and 70.2 are
mutually exclusive, and that the clause "[e]xcep t as otherwise provided in this Agreement …" in
Article 70.2 does not refer to Article 70.1.36  In the view of the Panel, any other interpretation would
reduce Articles 70.6 and 70.7 to redundancy or inutility.37  Finally, the Panel rejected Canada's
argument that, while the other patent rights under the  TRIPS Agreement  may apply to inventions
protected by Old Act patents, the patent term righ t alone under Article 33 does not.  The Panel saw no
textual or contextual legal basis for such a distinction in the  TRIPS Agreement .38
52. In addressing this issue, we will proceed as follows.  First, we will examine whether
Article 70.1 provides that the obligations of the  TRIPS Agreement  do not apply to Old Act patents.
Next, we will examine whether Article 70.2 provides that the obligations of the  TRIPS Agreement   do
apply to Old Act patents.  And, finally, we will examine whether, for the purposes of Article 70, thepatent term obligation in Article 33 should be treated differently from other obligations under theTRIPS Agreement .
53. Canada claims that the Panel erred in finding that Article 70.1 does not prevent the
obligations of the  TRIPS Agreement  from applying to Old Act patents.  In addressing this issue, we
look first, as always, at the text of the treaty provision, in accordance with the general rule of
                                                     
34Canada's appellant's submission, para. 238.
35Panel Report, para. 6.41.
36Ibid., para. 6.44.
37Ibid., para. 6.48-6.49.
38Ibid., para. 6.52-6.54.WT/DS170/AB/R
Page 16
interpretation in Article 31 of the  Vienna Convention on the Law of Treaties  (the " Vienna
Convention ").39  Article 70.1 states:
Article 70
Protection of Existing Subject Matter
1.   This 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. (emphasis added)
54. Our main task is to give meaning to the phrase "acts which occurred before the date of
application" and to interpret Article 70.1 harmoniously with the rest of the provisions of Article 70.We are of the view that the term "acts" has been used in Article 70.1 in its normal or ordinary sense of"things done", "deeds", "actions" or "operations".  In the context of "acts" falling within the domain ofintellectual property rights, the term "acts" in Article 70.1 may, therefore, encompass the "acts" ofpublic authorities (that is, governments as well as their regulatory and administrative authorities) aswell as the "acts" of private or third parties.  Examples of the "acts" of public authorities may include,
in the field of patents, the examination of patent applications, the grant or rejection of a patent, the
revocation or forfeiture of a patent, the grant of a compulsory licence, the impounding by customsauthorities of goods alleged to infringe the intellectual property rights of a holder, and the like.
40
Examples of "acts" of private or third parties may include "acts" such as the filing of a patentapplication, infringement or other unauthorized use of a patent, unfair competition, or abuse of patentrights.
41
                                                     
39Done at Vienna, 23 May 1969, 1155 U.N.T.S . 331;  8 International Legal Materials 679.  We have
previously confirmed this approach in Appellate Body Report,  United States – Standards for Conventional and
Reformulated Gasoline , WT/DS2/AB/R, adopted 20 May 1996, p. 23;  Appellate Body Report,  Japan – Taxes
on Alcoholic Beverages , WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, p. 12;
and, most recently, in Appellate Body Report,  Argentina – Safeguard Measures on Imports of Footwear
("Argentina - Footwear Safeguards "), WT/DS121/AB/R, adopted 12 January 2000, para. 81.
40Article 2 of the  TRIPS Agreement  provides, in pertinent part, that, with respect to Part II of the
Agreement, which includes Section 5 relating to "Patents", "Members shall comply with Articles 1 through 12,and Article 19, of the  Paris Convention  (1967)", which is defined in footnote 2 of the  TRIPS Agreement  as the
Stockholm Act of 14 July 1967 of the  Paris Convention  for the Protection of Industrial Property , done at Paris
on 20 March 1883.  Reference to various Articles of the  Paris Convention  that relate to patents will also show
that patents are granted for protection of "inventions", and that inventions are the " subject matter " of patents.
The word "acts" is mentioned in Article 4B of the  Paris Convention , notably in the context of certain "acts" of
third parties.  This indicates to us that part of the wider context for such terms, as used in the  TRIPS Agreement ,
is the way in which the same terms are used in the  Paris Convention  (1967).  We note in the World Intellectual
Property Organization (WIPO) treatise, Introduction to Intellectual Property, Theory and Practice (Kluwer LawInternational Ltd., 1997), a description of:  "actions" by public authorities in relation to the grant and publication
of patents (p. 134, paras. 7.78-7.85);  and "invention" (p. 123, paras. 7.1).  Similarly, we note also the
descriptions in this WIPO treatise of "subject matter" as that term relates to patents (p. 124, para. 7.8).  These
descriptions are consistent with the interpretations we give to these terms in this Report.
41For examples discussed by the Panel, see Panel Report, para. 6.40.WT/DS170/AB/R
Page 17
55. Article 70.1 provides that, where such "acts" "occurred" before the date of application of the
TRIPS Agreement   for a Member, that is to say, where such "acts" were done, carried out or
completed before that date, no obligation of the  TRIPS Agreement   is to be imposed on a Member in
respect of those "acts".  Those "acts" themselves cannot be called in question after the date ofapplication of the  TRIPS Agreement  for a Member.  In this regard, we note that, in this dispute, the
United States has repeatedly emphasized that it is not challenging or complaining against any "act" ofany Canadian public authority or private party th at took place before 1 January 1996, the date of
application of the  TRIPS Agreement  for Canada.
42
56. However, in the realm of intellectual property rights, it is of fundamental importance to
distinguish between "acts" and the "rights" created by those "acts".  In the field of patents, for
example, the grant of a patent (which is clearly an "act") confers at least the following substantiverights on the grantee, according to the provisions of the  TRIPS Agreement : national treatment
(Article 3);  most-favoured-nation treatment (Article 4);  product and process patents being availablein all fields of technology;  non-discrimination between imported and domestic products(Article 27.1);  the term of protection (Article 33);  and "reversal of burden of proof" in the case ofprocess patents (Article 34).
57. With respect to Article 70.1, the crucial question for consideration before us is, therefore:  if
patents created by "acts" of public authorities under the Old Act continue to be in force on the date ofapplication of the  TRIPS Agreement  for Canada (that is, on 1 January 1996), can Article 70.1 operate
to exclude those patents from the scope of the  TRIPS Agreement , on the ground that they were
created by "acts which occurred" before that date?
58. The ordinary meaning of the term "acts" suggests that the answer to this question must be no.
An "act" is something that is "done", and the use of the phrase "acts which occurred" suggests thatwhat was done is now complete or ended.  This excludes situations, including existing rights andobligations, that have  not ended.  Indeed, the title of Article 70, "Protection of Existing Subject
Matter", confirms contextually that the focus of Article 70 is on bringing within the scope of the
TRIPS Agreement  "subject matter" which, on the date of the application of the Agreement for a
Member, is existing and which meets the relevant criteria for protection under the Agreement.
59. A contrary interpretation would seriously erode the scope of the other provisions of
Article 70, especially the explicit provisions of Article 70.2.  Almost any existing situation or rightcan be said to have arisen from one or more past "acts".  For example,  virtually all contractual and
                                                     
42Rebuttal submission of the United States, para. 30, Panel Report, p. 56.  Oral statement of the
United States at the Second Panel Meeting, para. 21, Panel Report, p. 61.WT/DS170/AB/R
Page 18
property rights could be said to arise from "acts which occurred" in the past.  If the phrase "acts which
occurred" were interpreted to cover all  continuing  situations involving patents which were granted
before the date of application of the  TRIPS Agreement  for a Member, including such rights as those
under Old Act patents, then Article 70.1 would preclude the application of virtually the whole of theTRIPS Agreement  to rights conferred by the patents arising from such "acts".  This is not consistent
with the object and purpose of the  TRIPS Agreement , as reflected in the preamble of the Agreement.
60. We conclude, therefore, that Article 70.1 of the  TRIPS Agreement  cannot be interpreted to
exclude existing rights, such as patent rights, even if such rights arose through acts which occurred
before the date of application of the  TRIPS Agreement  for a Member.  We, therefore, confirm the
finding of the Panel that Article 70.1 does not exclude from the scope of the  TRIPS Agreement  Old
Act patents that existed on the date of application of the  TRIPS Agreement  for Canada.
61. Canada also appeals the Panel's determination that Article 70.2 and, therefore, Article 33,
applies to Old Act patents.  We recall that the Panel first found that the "subject matter … which isprotected" on the date of application of the  TRIPS Agreement  for Canada includes "inventions"
protected by Old Act patents.
43  The Panel then found that, under Article 70.2, the  TRIPS Agreement
gives rise to obligations in respect of those patented inventions.44  Canada does not contest that the
"subject matter … which is protected" in this case is the patented inventions existing at the time the
 TRIPS Agreement  became applicable for Canada.  However, Canada does not accept that the
obligation in Article 33 applies to Old Act patents.
62. We begin our examination of Article 70.2 with the text of the provision, which states:
Article  70
Protection of Existing Subject Matter
. . .
2.   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)
                                                     
43Panel Report, para. 6.36.
44Ibid.WT/DS170/AB/R
Page 19
63. In examining the text of this treaty provision, the first interpretative issue is whether Old Act
patents are "subject matter existing … which is protected" on the date of application of the  TRIPS
Agreement  for Canada.  The second is to determine whether the clause "[e]xcept as otherwise
provided", which qualifies Article 70.2, applies to the issue raised in this appeal.  We deal with eachof these issues in turn.
64. We first examine the meaning of the term "subje ct matter".  On this issue, the Panel said:
. . . 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 requirementsset out in Part II of the Agreement, 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 .
The Panel concluded:
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.
45
65. We agree with the Panel's reasoning that "subject matter" in Article 70.2 refers, in the case of
patents, to inventions .  The ordinary meaning of the term "subject matter" is a "topic dealt with or the
subject represented in a debate, exposition, or work of art".46  Useful context is provided by the
qualification of the term "subject matter", in the same sentence of Article 70.2, by the word"protected", as well as by the phrase "meet the criteria for protection under the terms of this
Agreement" appearing later in the same sentence.  As noted earlier, the title to Article 70 also uses the
words "Protection of Existing Subject Matter".  We can deduce, therefore, that the "subject matter",for purposes of Article 70.2, is that which is "protected", or "meets the criteria for protection", underthe terms of the  TRIPS Agreement .  As, in the present case, patents are the means of protection, then
whatever patents protect must be the "subject matter" to which Article 70.2 refers.
66. Articles 27, 28, 31 and 34 of the  TRIPS Agreement  also use the words "subject matter" with
respect to patents and provide an equally useful context for interpretation.  Article 27, entitled"Patentable Subject Matter", states:  "patents shall be available for any  inventions " … .
47  This Article
                                                     
45Panel Report, para. 6.36.
46The New Shorter Oxford English Dictionary , Lesley Brown (ed.), (Clarendon Press, 1993), Vol. I,
p. 1849.
47Emphasis added.WT/DS170/AB/R
Page 20
identifies the criteria that an invention must fulfill in order to be eligible to receive a patent, and it also
identifies the types of inventions that may be excluded from patentability even if they meet thosecriteria.  On the other hand, in Articles 28, 31 and 34, the words "subject matter" relate to patents thatare granted pursuant to the criteria in Article 27;  that is to say, these Articles relate to inventions thatare protected by patents granted, as distinguished from the "patentable" inventions to which Article 27refers.  These Articles confirm the conclusion that  inventions  are the relevant "subject matter" in the
case of patents, and that the "subject matter" in Article 70.2 means, in the case of patents,  patentable
or patented inventions.  Article 70.2 thus gives rise to obligations in respect of all such inventions
existing on the date of application of the  TRIPS Agreement  for a Member.  In the appeal before us,
where the measure in dispute is Section 45 of Canada's  Patent Act , which applies to Old Act patents,
the word "subject matter" means the inventions that were protected by those patents.  We, therefore,confirm the conclusion of the Panel in this regard.
67. We now consider whether the qualifying provision at the beginning of Article 70.2 applies in
this case.  Article 70.2 begins with the words "Exc ept as otherwise provided for in this Agreement".
Canada argues that Article 70.1 constitutes an exception for "subject matter existing … and which isprotected" on the date of application of the  TRIPS Agreement  for Canada;  that Article 70.1 is,
therefore, "otherwise provided", within the mean ing of this qualifying provision;  and that,
accordingly, Article 70.1 overrides Article 70.2.  Canada concludes, as a consequence, that theobligation in Article 33 does not apply to Old Act patents.
68. In addressing this issue, the Panel stated:
Because we consider that the word "acts" and the term "subject
matter" are different concepts with disparate meanings and the term
"acts" as used in Article 70.1 refers only to discrete acts which predatethe 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.
48
69. Like the Panel, we see Articles 70.1 and 70.2 as dealing with two distinct and separate
matters.  The former deals with past "acts", while the latter deals with "subject matter" existing on theapplicable date of the  TRIPS Agreement .  Article 70.1 of the  TRIPS Agreement  operates only to
exclude obligations in respect of "acts which occurred" before the date of application of the  TRIPS
Agreement , but does  not exclude rights and obligations in respect of  continuing situations .  On the
contrary, "subject matter existing … which is protected" is clearly a continuing situation, whether
                                                     
48Panel Report, para. 6.44.WT/DS170/AB/R
Page 21
viewed as protected inventions, or as the patent rights attached to them.  "Subject matter existing …
which is protected" is not within the scope of Article 70.1, and, therefore, the "[e]xcept as otherwiseprovided for" clause in Article 70.2 can have no application to it.  Thus, for the sake of argument,even if there is a relationship between Article 70.1 and the opening proviso in Article 70.2, Canada'sargument with respect to Old Act patents fails nonetheless, as we have concluded that the continuingrights relating to Old Act patents do not fall within the scope of Article 70.1.
70. We wish to point out that our interpretation of Article 70 does not lead to a "retroactive"
application of the  TRIPS Agreement .  Article 70.1 alone addresses "retroactive" circumstances, and it
excludes them generally from the scope of the Agreement.  The application of Article 33 to inventionsprotected under Old Act patents is justified under Article 70.2, not Article 70.1.  A treaty applies toexisting rights, even when those rights result from "acts which occurred" before the treaty entered intoforce.
71. This conclusion is supported by the general principle of international law found in the  Vienna
Convention , which establishes a presumption against the retroactive effect of treaties in the following
terms:
Article 28
Non-retroactivity of treaties
Unless a different intention appears from the treaty or is otherwise
established, its provisions do not bind a party in relation to any act or
fact which took place or any situation which ceased to exist  before the
date of the entry into force of the treaty with respect to that party.
(emphasis added)
 49
72. Article 28 of the  Vienna Convention  covers not only any "act", but also any "fact" or
"situation which ceased to exist".  Article 28 establishes that, in the absence of a contrary intention,treaty provisions do  not apply to "any situation which ceased to exist" before the treaty's entry into
force for a party to the treaty.  Logically, it seems to us that Article 28 also necessarily implies that,
absent a contrary intention, treaty obligations  do apply to any "situation" which has  not ceased to
exist – that is, to any situation that arose in the past, but continues to exist under the new treaty.Indeed, the very use of the word "situation" suggest s something that subsists and continues over time;
it would, therefore, include "subject matter existing … and which is protected", such as Old Act
                                                     
49We have endorsed this general principle of international law in Appellate Body Report,  Brazil –
Measures Affecting Desiccated Coconut , WT/DS22/AB/R, adopted 20 March 1997, p. 15, and in Appellate
Body Report,  European Communities – Regime for the Importation, Sale and Distribution of Bananas ,
WT/DS27/AB/R, adopted 25 September 1997, para. 235.WT/DS170/AB/R
Page 22
patents at issue in this dispute, even though those patents, and the rights conferred by those patents,
arose from "acts which occurred" before the date of application of the  TRIPS Agreement  for Canada.
73. This interpretation is confirmed by the Commentary on Article 28, which forms part of the
preparatory work of the  Vienna Convention :
If, however, an act or fact or situation which took place or arose prior to
the entry into force of a treaty contin ues to occur or exist after the treaty
has come into force, it will be caught by the provisions of the treaty.
The non-retroactivity principle cannot be infringed by applying a treaty
to matters that occur or exist when th e treaty is in force, even if they
first began at an earlier date.50
This point is further explained by the Special Rapporteur:
The main point … was that "the non-retroactivity principle cannot be
infringed by applying a treaty to matters that occur or exist when the
treaty is in force, even if they firs t began at an earlier date".  In these
cases, the treaty does not, strictly speaking, apply to a fact, act or
situation falling partly within and partly outside the period during
which it is in force;  it applies only to the fact, act or situation whichoccurs or exists after the treaty is in force.  This may have the result that
prior facts, acts or situations are brought under consideration for the
purpose of the application of the treaty;  but this is only because of
their causal connexion with the subsequent facts, acts or situations to
which alone in law the treaty applies .
51 (emphasis added)
74. We note that Article 28 of the  Vienna Convention  is not applicable if "a different intention
appears from the treaty or is otherwise established".  We see no such "different intention" inArticle 70.  Despite some differences in wordin g and structure from Article 28, we do not see
Article 70.1 as in any way establishing "a different intention" within the meaning of Article 28 of the
Vienna Convention .
75. The Panel found that Article 70.2 makes the obligations of the  TRIPS Agreement  applicable
to inventions protected by Old Act patents. Canada does not argue in this appeal that  none  of the
obligations in the  TRIPS Agreement  relating to patent rights applies to Old Act patents.  Canada
argues, instead, that, although Article 70.2 may make  some  obligations under the TRIPS Agreement
applicable to Old Act patents, Article 70.2 does not make the obligation in Article 33 relating to thepatent term  applicable to such patents.  Thus, Canada seeks to distinguish the obligation to provide a
particular patent term from the other obligations relating to patents in Section 5 of the                                                     
50See D. Raushning, ed.,  Vienna Convention on the Law of Treaties, Travaux Préparatoires ,
(Alfred Metzner Verlag, 1978), observation 3 on Article 28 of the International Law Commission Final Draft,p. 220.
51Ibid., observation 3 on the Waldock Report VI, p. 218.WT/DS170/AB/R
Page 23
 TRIPS Agreement , notably those relating to exclusive rights in Article 28, by showing that the
obligation to provide a patent term of not less than twenty years from the filing date, unlike the otherobligations in Section 5, is an "integral part"
52 of the "acts" of granting and filing.
76. The Panel's description of Canada's argument, a description which Canada specifically
endorses in its appellant's submission53, is as follows:
[U]nlike Article 33 which is temporal in nature because of its linkage of
both the commencement and the expiry dates of the term of protectionwith 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.
54
Responding to this argument, the Panel said:
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 allrelevant  TRIPS  obligations in relation to them.
55
77. We agree.  Article 70.2 applies the obligations of the  TRIPS Agreement  to "all subject matter
existing … and which is protected" on the date of application of the  TRIPS Agreement  for a Member .
A Member is required, as from that date, to implement  all obligations under the  TRIPS Agreement  in
respect of such existing subject matter.  This  includes the obligation in Article 33.  We see no basis in
the text for isolating or insulating the obligation in Article 33 relating to the duration of a patent termfrom the other obligations relating to patents that are also found in Section 5 of the  TRIPS Agreement .
There is nothing whatsoever in Section 5 to indicate that the obligation relating to patent term inArticle 33 differs in application in any respect from the other obligations in Section 5.  An obligationthat relates to duration must necessarily have a beginning and an end date.  On that ground alone, itcannot be argued that the obligation is attached to, and arises uniquely from, certain "acts".  Although
Canada has not done so, it could just as easily be argued that the exclusive rights under Article 28 are
also an "integral part" of the "act" of granting a patent, as those rights also can arise only from thegrant and consequent existence of a patent.
                                                     
52Oral statement of Canada at the Second Panel M eeting, para. 66, Panel Report, p. 145.  See also
response of Canada to question 37 from the Panel, Panel Report, p. 161.
53Canada's appellant's submission, para. 222.
54Panel Report, para. 6.28.
55Ibid., para. 6.53.WT/DS170/AB/R
Page 24
78. We note, furthermore, that, despite the presence of several other paragraphs in Article 70 that
provide clarifications or exceptions to the general rules set out in paragraphs 1 and 2, none of theseother paragraphs states that the obligation in Article 33 has a different status from the otherobligations in the  TRIPS Agreement .  Sometimes the absence of something means simply that it is not
there.  And, in our view, the distinction that Cana da sees between the obligation in Article 33 and the
other obligations in Section 5 is not contemplated by the  TRIPS Agreement :  it is not there.
79. For all these reasons, we conclude that Article 70.2, and not Article 70.1, of the  TRIPS
Agreement  applies to inventions protected by Old Act patents and to the rights conferred by those
patents, because they are "subject matter existing … and which is protected" on the date of applicationof the  TRIPS Agreement  for Canada.  We, therefore, conclude that Canada is required to apply the
obligation contained in Article 33 of the   TRIPS Agreement  to Old Act patents.
VI. Article 33 of the  TRIPS Agreement
80. Having concluded from our examination of Article 70 that the measure at issue in this appeal
does fall within the scope of coverage of the  TRIPS Agreement , and having concluded that Canada is,
therefore, required to apply the obligation in Article 33 of the  TRIPS Agreement  from the date of
application of the Agreement for Canada, we must next ask whether Canada has done so.
81. Canada appeals the Panel's finding that Section 45 of Canada's  Patent Act  is inconsistent with
Article 33.  Canada argues that the Panel misinterpreted Article 33 in two principal ways: first, infinding that there is no textual or contextual support for the view that Article 33 requires Members toprovide patent holders with a term of "effective" protection
56;  and, second, in adopting a "specialized,
extra-ordinary and obsolete meaning"57 of the word "available" that excludes consideration of the
various administrative steps in Canada's patent-granting procedure from being used to calculate theearliest date on which the term of protection of a patent may expire.
82. The application of Article 33 to Section 45 of Canada's  Patent Act  raises a preliminary issue
with respect to Canada's interpretation of the te rm "available" in Article 33.  In the context of
Section 45 of Canada's  Patent Act , we are persuaded that the Panel was correct in finding that
whether a patent term ending not earlier than twenty years after filing was "available"  at the time of
filing and grant of the patent under the Old Act  is irrelevant in examining the consistency of
                                                     
56Panel Report, para. 6.92.
57Canada's appellant's submission, paras. 4, 117, 136, 150 and 151.WT/DS170/AB/R
Page 25
Section 45 with Article 33 of the  TRIPS Agreement.58  The procedures regarding the "availability" of
a patent term before the date of application of the  TRIPS Agreement  for Canada relate to "acts which
occurred"  before  the date of application of the Agreement and are, therefore, under Article 70.1, not
subject to the obligations of the Agreement.
83. That said, we will nonetheless examine the ar guments of Canada relating to the notion of
"availability".  We will look first at the meaning of Article 33.  Then we will examine whetherSection 45 of Canada's  Patent Act  is consistent with Article 33.
84. We begin with the text of Article 33 of the TRIPS Agreement , which states:
The term of protection available shall not end before the expiration of a
period of twenty years counted from the filing date . (emphasis added)
85. In our view, the words used in Article 33 present very little interpretative difficulty.  The
"filing date" is the date of filing of the patent application.  The term of protection "shall not end"
before twenty years counted from the date of filing of the patent application.  The calculation of the
period of "twenty years" is clear and specific.  In simple terms, Article 33 defines the earliest date onwhich the term of protection of a patent may end.  This earliest date is determined by astraightforward calculation:  it results from taking the date of filing of the patent application andadding twenty years.  As the filing date of the patent application and the twenty-year figure are bothunambiguous, so too is the resultant earliest end date of the term of patent protection.
86. Section 45 of Canada's  Patent Act  provides that:
… 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 . (emphasis
added).
87. The meaning of Section 45 is straightforward.  Section 45 defines the term of patent
protection in terms of the starting date (the date of "issue" of the patent) and of a duration(seventeen years).  These terms are unambiguous.  As a result, so too is the end date of patent
                                                     
58The Panel stated:
According to Article 65.1, Canada b ecame obligated to apply Article 33 on
1 January 1996.  In our view, no Member can implement an obligation byreference to a state of affairs which ceased to exist in respect of Old Act
patents at the time the obligation to make available a term of protection that
does not end before 20 years from the date of filing became applicable.
See Panel Report, para. 6.120.WT/DS170/AB/R
Page 26
protection.  It is derived through simple calculation:  the date of issue of the patent plus seventeen
years.
88. Article 33 requires a Member to make a term of protection "available".  Canada argues that
Section 45 of its  Patent Act  makes "available", on a sound legal basis, a twenty-year term to every
patent applicant because, under the Canadian regulatory practices and procedures, every patentapplicant has statutory and other means to control and delay the patent-granting process.  The Panelrejected this argument, and interpreted the word "available" in the following terms:
Black's Law Dictionary  defines the word "available" as "having
sufficient force or efficacy;  effectual;  valid" and the word "valid" in
turn means "having legal strength or force…incapable of being
rightfully overthrown or set aside."  The dictionary meaning of theword "available" would suggest that patent right holders are entitled,
as a matter of right , to a term of protection that does not end before
twenty years from the date of filing.
59
89. The Panel concluded 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 filingdoes not make available, as a matter of right, to patent applicants a
term of protection required by Article 33.
60
90. We agree with the Panel that, in Article 33 of the  TRIPS Agreement , the word "available"
means "available, as a matter of right", that is to say, available as a matter of legal right and certainty.
91. The key question for consideration with respect to the "availability" argument is, therefore,
whether Section 45 of Canada's  Patent Act , together with Canada's related regulatory procedures and
practices, make available, as a matter of legal right and certainty, a term of protection of twenty yearsfrom the filing date for each and every patent.  The answer is clearly in the negative, even without
disputing the assertions made by Canada with resp ect to the many statutory and other informal means
available to an applicant to control the patent process.  The fact that the patent term required underArticle 33 can be a by-product of possible delays in the patent-granting process does not imply thatthis term is available, as a matter of legal right and certainty, to each and every Old Act patentapplicant in Canada.
                                                     
59Panel Report, para. 6.102.
60Ibid., para. 6.109.WT/DS170/AB/R
Page 27
92. To demonstrate that the patent term in Article 33 is "available", it is not sufficient to point, as
Canada does, to a combination of procedures that, when used in a particular sequence or in aparticular way,  may add up to twenty years.  The opportunity to obtain a twenty-year patent term
must not be "available" only to those who are so mehow able to meander successfully through a maze
of administrative procedures.  The opportunity to  obtain a twenty-year term must be a readily
discernible and specific right, and it must be clearly seen as such by the patent applicant when a patentapplication is filed.  The grant of the patent must be sufficient  in itself  to obtain the minimum term
mandated by Article 33.  The use of the word "available" in Article 33 does not undermine but, rather,
underscores this obligation.
93. Canada also appeals the Panel's rejection of the view that Article 33 embodies a notion of
"effective" protection.  This notion, advanced by Canada, would allow a different end date from thatspecified in Article 33, so long as the result was equivalent "effective" protection measured from thedate of grant of the patent to its expiry.
94. Taking note of the clear wording of Article 33, the Panel concluded that:
In relation to the equivalence argument, we find that the term of
protection under Section 45 is inconsistent with the minimum standardof 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.
61
95. The text of Article 33 gives no support to the notion of an "effective" term of protection as
distinguished from a "nominal" term of protection.  On the contrary, the obligation in Article 33 isstraightforward and mandatory:  to provide, as a spec ific right, a term of protection that does not end
before the expiry of a period of twenty years counted from the filing date.
96. In support of this notion of "effective" protection, Canada argues that Article 33 must be read
conjunctively with Article 62.2, which recognizes th e fact that the length of the patent-granting
process invariably involves some curtailment of the period of protection.  According to Canada, so
long as patents are granted "within a reasonable period of time" and there is no "unwarranted
curtailment of the period of protection", Article 33, when read with Article 62.2, permits a Member toprovide a term of "effective" protection that is equivalent to the nominal term of twenty years fromfiling prescribed in Article 33.
62  As the American, European and Canadian patent offices take, on an
                                                     
61Panel Report, para. 6.100.
62Canada's appellant's submission, paras. 90-91 and  94.WT/DS170/AB/R
Page 28
average, from four to five years to grant a patent63, this period must, in Canada's view, be regarded as
"a reasonable period of time", and, therefore, the term of seventeen years from the grant of the patentthat is provided under Section 45 of Canada's  Patent Act  must be regarded as "equivalent" to the term
of twenty years from the filing of the patent application that is prescribed by Article 33.
64
97. We see no merit in this argument of Canada.  Article 62.2 deals with procedures relating to
the acquisition of intellectual property rights.  Article 62.2 does not deal with the duration of thoserights once they are acquired.  Article 62.2 is of no relevance to this case.  This purely procedural
Article cannot be used to modify the clear and substantive standard set out in Article 33 so as to
conjecture a new standard of "effective" protection.  Each Member of the WTO may well have itsown subjective judgement about what constitutes a "reasonable period of time" not only for grantingpatents in general, but also for granting patents in specific sectors or fields of complexity.  If Canada'sarguments were accepted, each and every Member of the WTO would be free to adopt a term of"effective" protection for patents that, in its judgement, meets the criteria of "reasonable period oftime" and "unwarranted curtailment of the period of protection", and to claim that its term ofprotection is substantively "equivalent" to the term of protection envisaged by Article 33.  Obviously,this cannot be what the Members of the WTO envisaged in concluding the TRIPS Agreement .  Our
task is to interpret the covered agreements harmoniously.
65  A harmonious interpretation of Article 33
and Article 62.2 must regard these two treaty provisions as distinct and separate Articles containingobligations that must be fulfilled distinctly and separately.
98. In assessing the consistency of Section 45 with Article 33, we observe that the term of patent
protection set out in Section 45 is seventeen years from the date on which the patent is granted, whilethe term of patent protection required by Article 33 is a minimum of twenty years from the date offiling.  Thus, Section 45 will meet the minimum standard prescribed in Article 33 only if the periodbetween the filing and the issue of the patent (the "pendency period", during which a patentapplication is examined) is equal to or greater than three years.  This may not always be the case,
since the "pendency period" may be  less than three years in many cases.  In fact, in this case, Canada
has provided uncontested evidence that 66,936 patents existing on 1 January 2000, about 40 per centof the Old Act patents then in force, end earlier than required under Article 33, by virtue ofSection 45.
66
                                                     
63Canada's appellant's submission, para. 71.
64Ibid., paras. 51 and 59.
65Appellate Body Report,  Korea – Definitive Safeguard Measure on Imports of Certain Dairy
Products ,  WT/DS98/AB/R, adopted 12 January 2000, para. 81;  Appellate Body Report,  Argentina – Footwear
Safeguards , supra , footnote 39, para. 81.
66Panel Report, para. 2.9.WT/DS170/AB/R
Page 29
99. We find, therefore, that the Panel correctly interpreted Article 33 of the  TRIPS Agreement ,
and correctly found that Section 45 of Canada's  Patent Act  is inconsistent with Canada's obligations
under Article 33 of the  TRIPS Agreement .  Consequently, we uphold the Panel's finding that a term of
protection that does not end before twenty years counted from the date of filing is not available underSection 45 of Canada's  Patent Act , and that, accordingly, Section 45 is inconsistent with Article 33 of
the  TRIPS Agreement .
100. In conclusion, we wish to point out that our findings in this appeal have no effect whatsoever
on the transitional arrangements found in Part VI of the  TRIPS Agreement .  The provisions in Part VI
establish  when obligations of the  TRIPS Agreement   are to be applied by a WTO Member and not
what those obligations  are.  The issues raised in this appeal relate to what the obligations are, not to
when they apply.
101. Also, we note that our findings in this appeal do not in any way prejudge the applicability of
Article 7 or Article 8 of the  TRIPS Agreement  in possible future cases with respect to measures to
promote the policy objectives of the WTO Members that are set out in those Articles.  Those Articlesstill await appropriate interpretation.
VII. Findings and Conclusions
102. For the reasons set out in this Report, the Appellate Body:
(a) upholds the conclusion of the Panel that Article 70.2, and not Article 70.1, of the
TRIPS Agreement  applies to inventions protected by Old Act patents because such
inventions are "subject matter existing … and which is protected" on the date ofapplication of the  TRIPS Agreement  for Canada and, consequently, Canada is
required to apply the obligation contained in Article 33 of the  TRIPS Agreement  to
Old Act patents;  and
(b) upholds the finding of the Panel that a term of protection that does not end before
twenty years counted from the date of filing is not available under Section 45 of
Canada's Patent Act , and that, accordingly, Section 45 is inconsistent with Article 33
of the  TRIPS Agreement .
103. The Appellate Body recommends that the DSB request Canada to bring Section 45 of its
Patent Act  into conformity with Canada's obligations under the  TRIPS  Agreement .WT/DS170/AB/R
Page 30
Signed in the original at Geneva this 11th day of August 2000 by:
_________________________
Julio Lacarte-Muró
Presiding Member
_________________________ _________________________
James Bacchus A.V. Ganesan
Member Member