WT/DS170/R
Page 30
ATTACHMENT 1.1
FIRST SUBMISSION OF THE UNITED STATES
(18 November 1999)
I. INTRODUCTION
1. This case is an exceedingly simple one.  Articles 33 and 70 of the WTO Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) require all WTO members
to provide a patent term of at least twenty years from the date of filing of the patent application.  For alarge group of patents, Canada applies a term that in many cases is shorter - calculated as seventeen
years from the date that a patent is issued.  A term of seventeen years from issuance is not the same as
a term of twenty years from filing.  For patent applications that are pending for less than three years
before being issued, the seventeen year term is shorter.  Thus, with respect to a large number of
existing patents, Canada is in violation of the TRIPS Agreement because of its failure to provide anadequate patent term.
II. FACTUAL BACKGROUND
2. The facts of this case are straight-forward and uncontested.  The Canadian Patent Act
provides that the term of patents based on applications filed before October 1, 1989, is seventeenyears from the date that the patent is issued.  For patents based on applications filed on or after that
date, the term is the TRIPS-minimum of twenty years from the filing date.  Sections 44 and 45 of the
Canadian Patent Act are unambiguous, and provide as follows:
44. Subject to section 46, 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.1
3. In general, the extent to which a patent term of seventeen years from issuance may be shorter
than the TRIPS-required term of twenty years from filing varies from patent to patent.  The gapdepends entirely on the time that elapsed between the date of filing of a particular patent application
and the date of issuance of the patent.  As a matter of simple arithmetic, for any patent that was issued
in less than three years from its date of filing, Canada’s term of seventeen years from issuance is
shorter than the TRIPS-mandated term of twenty years from filing.  Canada is in violation of the
TRIPS Agreement with respect to each and every one of these patents.  If a patent takes exactly threeyears to be issued, there is no practical 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 issued, the
seventeen-year term would actually be longer than required.
                                                     
1 Canadian Patent Act, R.S.C., ch. P-4, §§ 44- 45 (1985) (Can.) (emphasis added) (Article 46 of the
Canadian Patent Act, cross-referenced in the quoted articles, concerns the payment of maintenance fees for a
patent).WT/DS170/R
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4. During the consultations in this case, Canadian officials responded to written questions
submitted by the United States and provided estimates of the number of patents affected by the
provisions of the Canadian Patent Act at issue.2  According to Canada, 169,966 patents were still in
existence in June 1999 for which Canada provides a term of seventeen years from grant.  Of these
169,966 existing patents with a term of seventeen years from grant, Canada estimated that 66,936 --or 39.4% of them -- expire sooner than would be the case if Canada had provided a term of twenty
years from filing.  Historically, fifty percent (50%) of patent applications filed in Canada are from
U.S. applicants.  Thus, it appears that well over 33,000 U.S. patent holders are currently holding
patents with a term less than that required under the TRIPS Agreement.
5. Indeed, for some U.S. right holders, Canada’s delay in implementing its TRIPS obligations
has already caused tremendous harm.  As one example, a major pharmaceutical patent owned byPfizer Inc on its anti-depressant drug “ZOLOFT” (sertraline hydrochloride) expired in August 1999,
at the end of its term of seventeen years from issuance.  Under a TRIPS-level term of twenty years
from the date of filing, Pfizer’s Canadian patent for ZOLOFT should not have expired until October
2000, fourteen months later.
3
6. The patents affected by the inadequate Canadian patent term cover inventions in all fields oftechnology.  Due to the significance of patent protection to the pharmaceutical industry, Canada’s
TRIPS violation has a particularly severe impact  on the companies in this area.  However, the
thousands of patents affected by the Canadian deficiency cover inventions in fields as diverse as
automotive technology, telecommunications, plastics, and computer- related technologies.
4
7. Representatives of the Government of Canada have publicly acknowledged that Canada isobligated under the WTO to provide a term of at least twenty years from the date of filing for all
patents.  In a 1997 presentation to the Canadian House of Commons Standing Committee on Industry
that was reviewing amendments to the Patent Act,  Canada’s Minister of Industry, the Honourable
John Manley, stated that “We must give all patentees, pharmaceutical or otherwise, a minimum 20
year patent term.”5
III. PROCEDURAL BACKGROUND
8. The United States requested consultations in this case on May 6, 1999.  The United States
provided written questions to Canada on May 21, 1999.  Consultations were held on June 11, 1999.
These consultations focused on Canada’s answers to the U.S. questions and the legal issue that is setforth in this submission.  The consultations did not result in a resolution of the dispute.  The United
States first requested the establishment of a dispute settlement panel at the meeting of the Dispute
Settlement Body on July 26, 1999.  This Panel was established on September 22, 1999.  The Panel
was composed on October 22, 1999.
IV. LEGAL ANALYSIS
9. Article 33 of the TRIPS Agreement describes the required term of patent protection under the
Agreement.  Article 70 governs the treatment of subject matter existing on the date of application of
the TRIPS Agreement.  By providing a term of protection for many existing patents of lesser duration
                                                     
2 U.S. Questions to Canada, May 21, 1999 (US-Exhibit 1).
3 Letter from Ian C. Read, Senior Vice President, Pf izer Pharmaceuticals, to Geralyn S. Ritter, Office
of the U.S. Trade Representative (Oct. 15, 1999) (Exhibit US-2).
4 Sample affected patents corresponding to the cited areas of technology are attached.  (Exhibit US-3).
5 Speaking Notes for the Honourable John Manley, Minister of Industry, to the House of Commons
Standing Committee on Industry, Review of Bill C-91, 7 (Feb. 17, 1997) (available on Industry Canada web
site, www.ic.gc.ca) (emphasis added) (Exhibit US-4).WT/DS170/R
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than required under Article 33, Canada is in violati on of both of these provisions.  An analysis of the
text, context and object and purpose of Articles 33 and 70 supports this conclusion.6
10. Article 33 of the TRIPS Agreement is entitled “Term of Protection,” and provides that “The
term of protection available shall not end before the expiration of a period of twenty years countedfrom the filing date.”  By its plain terms, this Article obligates all WTO Members to grant a term of
protection for patents that runs at least until twenty years after the filing date of the underlying
application.  The phrasing of the provision -- “shall not end before” -- also indicates that the twenty
year term is a minimum term, rather than a maximum term, and that patent terms longer than twenty
years from the date of filing are wholly consistent with the Agreement.
11. Article 70 of the Agreement is entitled “Existing Subject Matter,” and contains a number of
transitional provisions.  Article 70.2 specifically applies to “subject matter existing at the date of the
application of the Agreement,” and provides in relevant part as follows:
Except as otherwise provided for in this Agreement, this Agreement
gives rise to obligations in respect of all subject matter existing at thedate 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.  . . .
Read in accordance with its ordinary meaning, Article 70 means that the TRIPS Agreement gives rise
to obligations – including the obligation to grant a patent term of at least twenty years from the date of
filing – in respect of all patents (“subject matter”) existing on January 1, 1996, the date of application
of the TRIPS Agreement to developed country Members of the WTO.
7
12. The context, object and purpose of Articles 33 and 70.2 are consistent with the plain meaningof the terms of these Articles, and certainly do not contradict it.  The TRIPS Agreement establishes
minimum standards of protection of intellectual pr operty rights.  Article 1.1 provides that “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.”
Thus, WTO Members do not have the option of provid ing sub-standard protection in one area so long
as they “compensate” by providing TRIPS-plus protection in another area.
13. Under Section 45 of the Canadian Patent Act, the term granted to patents issued on the basis
of applications filed before October 1, 1989, is seventeen years from the date on which the patent is
issued.  For such patents that were issued in less than three years, the seventeen year term provided
under Section 45 is shorter than the TRIPS-mandated term of twenty years from the date of filing.Thus, Canada is in violation of its TRIPS obligations under Articles 33 and 70.2 with respect to all
patents filed before October 1, 1989, that took less than three years to issue, and that were still in
existence on January 1, 1996.
14. The potential for Section 45 of the Canadian Patent Act to result in the grant of a sub-twenty
year term is clear from the text of the statute.  Although the application of this provision has in fact
                                                     
6 As the Appellate Body stated in India - Patent Protection for Pharmaceuticals and Agricultural
Chemical Products , WT/DS50/AB/R, p.17 (adopted Jan. 16, 1998), the obligations of the TRIPS Agreement
should be analyzed in accordance with Article 31 of the Vienna Convention.  Cf. United States – Standards for
Reformulated and Conventional Gasoline , WT/DS2/AB/R, p. 16-17 (adopted May 20, 1996).  Article 31 of the
Vienna Convention provides in part, “A treaty shall be interpreted in good faith in accordance with the ordinary
meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.”
7 TRIPS, art. 65.WT/DS170/R
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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 70.8  Furthermore, 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.9  Finally, it is
irrelevant whether, under certain conditions, Section 45 might result in the grant of a term ofprotection to certain right holders that is longer than required under TRIPS. Canada cannot rely upon
its TRIPS-plus level treatment of some patentees to justify its denial of TRIPS-level treatment to other
patentees.
10
15. Under the Vienna Convention, “any subsequent practice” in the application of an Agreement
may also establish “the agreement of the parties regarding its interpretation.”11  In this case, State
practice of other developed-country WTO Members in applying Articles 33 and 70 of the TRIPSAgreement demonstrates the term of patent protection that other Members have viewed as legally
required by the TRIPS Agreement.
16. In the United States,  prior to the TRIPS Agreement, the term of a patent under U.S. law was
seventeen years from the date of grant.  To implement TRIPS, however, the United States amended itslaw to provide a term of seventeen years from the date of grant of the patent or twenty years from the
effective filing date of the patent, whichever term is longer, for all patents in force (or that resulted
from an application filed before) the date six months after the enactment of the U.S. implementing
legislation.
12
17. Other WTO members have also amended their laws to comply with these TRIPS provisions.In a 1994 amendment to its Patent Act, Australia increased its standard patent term from sixteen years
from the date of filing to twenty years from the date of filing, effective July 1, 1995.
13  Moreover,
Australia applied the twenty-year term not just to patents filed after the effective date, but also to all
patents in force on the effective date.   Similarly, Germany, Greece and New Zealand also amendedtheir laws to implement the TRIPS obligation regard ing a twenty year term for all existing patents.
14
18. Portugal provides another example of correct - - if belated - - compliance with Articles 33
and 70.  The United States requested dispute settlement consultations with Portugal under the WTO
Dispute Settlement Understanding on April 30, 1996, regarding Portugal’s failure to apply the
provisions of Article 33 of TRIPS to all patents that were in force on January 1, 1996, and to all
patents that were granted based on applications that were pending on January 1, 1996.  OnAugust 23, 1996, Portugal issued Decree-Law 141/96 confir ming that all patents that were in force on
                                                     
8 See United States -- Section 337 of the Tariff Act of 1930, BISD 36S/386, para. 5.13 (adopted
Nov. 7, 1989).
9 See Dispute Settlement Understanding, art. 3.8.
10 See Section 337, at para. 5.14; see also TRIPS, art. 1.1.
11 Vienna Convention, art. 31(3)(b).
12 Uruguay Round Agreements Act (“URAA”), Pub. L. No. 103-465, § 532(a) (1994) (codified at 35
U.S.C. § 154); see also  Statement of Administrative Action, 334 (1994) (“A further change in U.S. law incident
to the change in how patent term is measured is required by virtue of the operation of Article 33, 70.2 and 70.4
of the TRIPS Agreement.  Specifically, section 532(a) of the implementing bill amends section 154 to provide
that the term of a patent in force on, or that results from an application filed before the date that is six monthsafter the date of enactment of the URAA [Dec. 8, 1994] will be the greater of 17 years from the date of patentgrant or 20 years from the date of filing of the application leading to the patent.”) (Exhibit US-5).
13 Patents (World Trade Organization Amendments) Act 1994, No. 154 of 1994, §§ 3-7 (Aust.)
(Exhibit US-6).
14 Law on the Extension of Industrial Property Rights , art. 6a (1995) (amended German law to extend
term from 18 to 20 years for all East German patents that had not expired on December 31, 1995) (Germ.)
(Exhibit US-7); Law No.  2359, art. 1 (15 November 1995) (Greece) (Exhibit US-8);  Act to Amend the Patents
Act 1953, Law No. 122, art. 18 (1994) (N.Z.) (Exhibit US-9).WT/DS170/R
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January 1, 1996, and all patents granted after that date based on applications that were pending on
January 1, 1996, will receive a term of protection that lasts either fifteen years from the date of grant
of the patent or twenty years from the effective filing date of the patent, whichever term is longer.15
V. CONCLUSION
19. The plain text of Articles 33 and 70 of the TRIPS Agreement requires Canada to grant a
minimum patent term of twenty years from the date of filing to all existing patents.  With respect to a
large number of existing patents, Canada applies a shorter term.  For these reasons, the United States
respectfully requests the Panel to find that Canada is in violation of Articles 33 and 70 of the TRIPS
Agreement, and to recommend that Canada bring its measures into conformity with its obligations
under the TRIPS Agreement.
                                                     
15 On October 3, 1996, the United States and Portugal notified the Dispute Settlement Body that this
case had been resolved.  WT/DS37/2, IP/D/3/Add.1 (8 Oct. 1996) (Exhibit US-10).WT/DS170/R
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ATTACHMENT 1.2
ORAL STATEMENT OF THE UNITED STATES AT THE
FIRST MEETING WITH THE PANEL
(20 December 1999)
1. Mr. Chairman, members of the Panel, it is an honor to appear before you to present the
position of the United States in this important case.  This case is extremely significant to U.S. patent
holders, and presents important TRIPS issues.  We very much appreciate the willingness of the
members of the Panel to participate in hearing it.  As you indicated in your statement Mr. Chairman,
the Panel has read the first submission of the United States in this matter so I do not intend to repeat
all of the arguments set forth in that submission.
2. The TRIPS provisions at issue in this case, Articles 33 and 70.2, are not complicated.  They
require Canada to provide a twenty year patent term to all patent holders.  Canada’s first submissiongoes to great lengths to avoid the plain language of Articles 33 and 70.2, and divert attention from the
straight-forward nature of this case.  The text of  the Agreement, however, cannot be ignored.  Article
33, in its entirety, states that “The term of protection shall not end before the expiration of a period of
twenty years counted from the filing date.”
3. What Canada’s first submission actually does is establish the following key facts that are not
in dispute and which are determinative of a violation of TRIPS:
- First, Section 45 of the Canadian Patent Act provides for a patent term of seventeen
years from the date of issuance of the Patent.
- Second, as of January 1, 2000, there will be approximately 67,000 existing Canadian
patents that will expire earlier than twenty years from the filing date.
1
4. In light of this evidence, Canada not only has not rebutted the U.S. prima facie  case, it has
confirmed the facts that establish that case.
5. In its brief, Canada appears to rely in part on an impermissible averaging methodology to
argue that the term of protection provided under Section 45 is “equivalent” to a term of twenty years
from filing.  The two terms are not equivalent, however, because under the seventeen year term, a
very large number of individual Canadian patents received a term of less than twenty years from
filing.
6. Canada’s arguments about equivalence are apparently also based on its having had in place a
series of procedures that allegedly would have permitted patent applicants to delay the grant of their
patents.  As we understand Canada’s argument, a patent applicant back in the late 1980's or early 90's
(years before TRIPS) should have obtained a twenty year term by asking a Canadian patent examinerto delay the examination – even though the patent law and rules contained no provision entitling the
applicant to such a delay -- or should have manipulated the system by actually abandoning or
forfeiting his application and then reinstating it.
                                                     
1 See Canada Exhibit 8, paras 19-20, and exhibits C and D to Canada Exhibit 8.WT/DS170/R
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7. An analogous argument was made by Argentina, and rejected by the Panel, in Argentina -
Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items .2  I n  t h a t  d i s p u t e ,  t h e
Panel observed that “[a] WTO Member cannot offer as a defence to a claim of violation of a WTO
agreement, that its internal system provides for a re medy to such violation to certain individuals, . . .
and that no violation of the WTO has therefore taken place.”3  Canada’s argument here is even weaker
than Argentina’s, in that the ri ght to a twenty year term under TRIPS did not even exist at the time
that right holders allegedly should have manipulated the procedural rules of the Canadian patent
system to obtain twenty years.  Moreover, the alleged practice of patent examiners to grant informal
requests to slow down their processing of a patent application appears not to have been a legal right of
the patent applicant, and was not published or available in written form.
8. In addition, Canada’s argument that applicants could and should have used these informal
procedures to delay the date of grant of their patents would condone the very abuses which it claims
justified its decision to amend its law in 1987.  Canada asserts on the one hand that pre-1989
applicants should have sought delays in the application process by urging patent officers to delay the
granting of their patents.  Yet Canada also observes that such conduct was “manipulative” and
disfavoured.
9. The United States has not argued that the term of protection required by Article 33 cannot be
modified if an applicant fails to comply with reasonable procedures or formalities, such as the
payment of maintenance fees.  Article 62.1 authorizes Members to condition the acquisition and
maintenance of intellectual property rights on compliance with reasonable procedures and formalities,but the second sentence of that paragraph specifies that the procedures and formalities must be
consistent with the Agreement.  Requiring that patent applicants choose between early protection for
their invention and a full twenty-year term of protection cannot be considered “reasonable.”  Article
62 has no relevance to this case, and does not excuse Canada from fulfilling its obligations under
Articles 33 and 70.2.
10. Canada’s arguments with respect to Article 70.2 also fail.  The text of Article 70.2 is key.  A
close textual analysis reveals the flaws in Canada’s interpretation of this provision.  Article 70.2 states
that except as otherwise provided in the Agreement, TRIPS “gives rise to obligations in respect of all
subject matter existing at the date of application  of this Agreement.”  A patent is a type of subject
matter.  Patents that existed at the date of application of the Agreement thus fall within the scope of
Article 70.2.  And Article 70.2 is quite clear: the Agreement “gives rise to obligations” in respect ofsuch patents.  The substantive obligation at issue is a twenty year patent term.
11. Canada makes much of the fact that the U.S. did not discuss in its written submission the
phrase “unless otherwise provided” in Article 70.2.  The phrase was not discussed, however, because
it has no bearing on the legal issues involved in this case, and certainly does not have the effectdescribed by Canada of essentially reading Article 70.2 out of the TRIPS Agreement.  It refers, inter
alia, to the second half of Article 70.2, which sets forth a different rule with respect to copyright,
providing that Article 18 of the Berne Convention governs the protection of existing subject matter.
When this phrase was added to Article 70.2 during the TRIPS negotiations, the Chairman of the
TRIPS negotiating group reported the following: “In the first line [of Article 70.2], the initial phrasewould be amended to read ‘Except as otherwise prov ided for in this Agreement . . .’  This would
make it clear that, for example, Article 18 of Berne applies by virtue of Article 9.1."
4
                                                     
2 WT/DS56/R (25 November 1997) at paras. 6.66 - 6.69.
3 WT/DS56/R at para. 6.68, n. 198.
4 10 + 10 Meeting, Speaking Note for the Chairman (16 Dec. 1991).WT/DS170/R
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12. The subsequent practice of WTO Members confirms the U.S. interpretation of Article 70.2.
Under the Vienna Convention (Article 31(3)(b)) subsequent practice in the application of an
Agreement may establish “the agreement of the parties regarding its interpretation.”  In our written
submission, we provided examples of our own practice, as well as that of other developed countries
obligated to implement TRIPS in 1996, including Australia, Germany, Greece, New Zealand, andPortugal, all of which amended their laws to ensure that the term of patents in existence and protected
in their territories did not end before a period of twenty years counted from the filing date of the
application.
13. Article 70.1 of TRIPS does not mandate a different result.  Article 70.1 provides 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.”  The reference in Article 70.1 to “acts”refers to, inter alia , the acts Canada identifies in paragraph 116 of its first submission, as well as such
acts as customs permitting entry of counterfeit or pirated goods prior to the date of application.
14. Let’s take a concrete example: TRIPS requires that countries provide all patentees with an
exclusive right of “offering for sale.”  Suppose a country did not provide that exclusive right back in1993 and someone offered for sale a patented product without authorization.  In 1993, it was not a
violation of the patent law.  Article 70.1 simply says that in implementing TRIPS, a country does not
have to go back and provide a remedy against that person for his 1993 acts.  The Agreement is not
retroactive.
15. Canada is confusing the prospective application of TRIPS standards with “retroactivity.”
Article 70.1 does not prevent the prospective application of these standards, including the standard
governing the length of patent terms, to existing subject matter as mandated by Article 70.2.
16. Furthermore, Article 70 must be read as a whole.  Article 70.1 cannot be interpreted without
considering its relationship with the other paragraphs of Article 70.  Canada argues that patents
“issued prior to January 1, 1996 . . . are not subject to the obligations in the TRIPS Agreement.”5  This
interpretation of Article 70.1 leaves a glaring question unanswered: If all pre-1996 patents are not
subject to TRIPS, what is the meaning of Article 70.2, particularly its reference to “subject matter
existing at the date of application of this Agreement . . and which is protected in that Member on the
said date”?  Canada gives this language no legal effect at all in violation of fundamental principles of
treaty interpretation.  Similarly, Canada’s reading of Article 70.1 would also imply that Articles 70.3,70.4, 70.5, and 70.6 are meaningless or wholly redundant.
17. Finally, Canada’s interpretation would have far-reaching and devastating consequences for
intellectual property right holders.   Under this interpretation, every intellectual property right that
existed before 1996 -- every patent, every copyright, every trademark, every industrial design andevery geographical indication - - receives absolutely no protection under TRIPS.  Accordingly, WTO
members could today revoke for no reason all patents that were issued prior to January 1996, and
remain in compliance with TRIPS.  Or they could grant compulsory licenses on all pre-1996 patents
without regard for any of the TRIPS conditions set out in Article 31.  Such a dramatic undermining of
the protection provided by the TRIPS Agreement is impossible to square with the text of Article 70,the subsequent practice of WTO members, and the negotiating history of the Agreement.
                                                     
5  Canada First Submission, para. 113.WT/DS170/R
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18. For all of these reasons, we urge this Panel to see this case for what it is, a straight-forward
dispute with undisputed key facts.  We respectfully request the Panel to reject Canada’s attempts to
obscure the real issues, and to find Canada in violation of Articles 33 and 70.2 of the TRIPS
Agreement.  Thank you.WT/DS170/R
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ATTACHMENT 1.3
RESPONSES OF THE UNITED STATES TO WRITTEN QUESTIONS FROM THE PANEL –
FIRST MEETING
(7 January 2000)
I. REPLIES OF THE UNITED STATES TO QUESTIONS FROM THE PANEL
ADDRESSED TO BOTH PARTIES
Q.1 *Article 62.2 provides that Members are to ensure that the procedures for granting
intellectual property rights allow granting of the right "within a reasonable period of time so as
to avoid unwarranted curtailment" of the protection period.
(a) What would constitute an "unwarranted curtailment" of a patent protection
term?
The meaning of “unwarranted curtailment” cannot be determined in the abstract, and
reasonableness may vary by situation.  Certainly delay for its own sake should not be
considered reasonable.
(b) Would an average pendency period for patents of approximately five years be
considered a "reasonable period of time" which avoided "unwarranted
curtailment" of a protection term?  Why, or why not?
An average pendency period of approximately five years may be considered
unreasonable in the context of Article 62.2.  Such an average pendency results in anaverage loss of full patent rights for approximately 1/4 of the potential term of a
patent.  While some loss of term due to pendency is inevitable, the loss of 1/4 of
potential term may rise to the level of unreasonableness and constitute an
“unwarranted curtailment of the period of protection.”
Q.2 What bearing, if any, do the general principles set out in paragraph 2 of Article 41 as
incorporated in Article 62.4 have on arguments put forward in this dispute concerning delays inthe grant of patents?
Article 41.2 provides that procedures concerning the enforcement of intellectual property
rights shall not be “unnecessarily complicated or costly, or entail unreasonable time-limits or
unwarranted delays.”  The same standards apply to procedures concerning the acquisition ofintellectual property rights.  TRIPS, Article 62.4.  These principles are highly relevant to Canada’s
defense in this case, and squarely reveal its weaknesses.  One of Canada’s arguments in this case
appears to be that patent owners - several years before the TRIPS Agreement was completed - should
have manipulated the old Act’s procedures for obtaining a patent in order to delay the grant of the
patent, solely for the purpose of extending the end-date of the term to which they were entitled underCanadian law.  Canada thus would require patent applicants to have followed unnecessarily
complicated procedures to obtain unwarranted delays in the grant of their patents, i.e. -- avoidable
delays justified for no purpose other than mere delay.  Besides conflicting with Article 62.4, the
imposition of such avoidable delays appears also to conflict with the very provision cited by CanadaWT/DS170/R
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as the source of the delay, Section 30.2, which allows reinstatement of an abandoned patent
application only where a delay “was not reasonably avoidable.”1
Q.3 Why is the word "available" used in conn ection with the term of patent protection in
Article 33 of the TRIPS Agreement but not in the provisions on the terms of protection of otherintellectual property rights?
The term “available” is used in connection with the duration of protection for industrial
designs in Article 26 of the TRIPS Agreement and in connection with the term of patent protection in
Article 33.  It is not found in the articles dealing with the term of protection for copyrighted works
(Article 12) or trademarks (Article 18).  Each  of these provisions, however, conveys the same
essential meaning and sets forth the required minimum term of protection that applies to each type ofintellectual property right.  Canada emphasizes the unremarkable fact that patent owners can forfeit
their patent rights (and thereby shorten their term) by failing to pay maintenance fees.  By the same
token, trademark owners can abandon their marks and have them cancelled for non-use.  Neither of
these possibilities undermines the basic requirements of Article 33 (which uses the term “available”)
and Article 18 (which does not) to provide a certain defined minimum term of protection to rightholders.  Under Article 33, Canada is required to make available a term of patent protection that does
not end before the expiration of a period of twenty years counted from the filing date.  Under
Article 70.2, that obligation is to be applied to patents that were in force on the date of application of
the TRIPS Agreement for Canada.  Canada does not provide a sound legal basis for such a term.
Holders of a patent in force on January 1, 1996, have no legal right to a term that did not end before adate of twenty years from the date of filing.  Such a term is not available under Canadian law for
thousands of right holders.
Q.4 Are you aware of any WTO Member that wa s obliged to apply the TRIPS Agreement as
of 1 January 1996 and that does not apply a patent protection term of 20 years from the date offiling to all patents, including those patents that were in force and patent applications that were
pending as of 1 January 1996?
Other than Canada, the United States is not aware of any WTO Member that was obliged to
apply the TRIPS Agreement as of 1 January 1996 and that does not apply a term of patent protection
of twenty years from the date of filing to all patents, including those patents that were in force and
patent applications that were pending as of 1 January 1996 .  As we noted in our first written
submission, several of these countries -- including the United States -- had to amend their laws to
apply the twenty year term to all existing patents and thereby meet their TRIPS obligation.
Q.5 Do you believe that a system in which the patent term is calculated from the date of
filing creates the same incentive to file a patent application promptly as a system in which the
patent term is calculated from the date of grant?
The two systems may not create exactly the same incentive to file a patent application
promptly.  The United States observes, however, that  priority rights, in the event of other applicants
for the same invention, provide the primary incentive for prompt filing in either system of termcalculation.
                                                     
1 Canadian Patent Act, R.S.C., ch. P-4, § 30.2 (1985).WT/DS170/R
Page 41
Q.6 Article 28 of the Vienna Convention on  the Law of Treaties 1969 reads as follows:
"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."
(a) Does Article 28 belong to those provisions of the Vienna Convention which are
part of customary international law?
Yes.  Article 28 of the Vienna Convention is part of customary international law.
(b) Which paragraph(s) of Article 70 refer(s) to "any act or fact which took
place…before the date of the entry into force of the treaty…"?
Article 70.1 encompasses “any act or fact which took place...before the date of the
entry into force of the treaty. . . .”
(c) Which paragraph(s) of Article 70 refer(s) to "any situation which ceased to exist
before the date of the entry into force of the treaty" or did not so cease to exist?
Is the ongoing protection of an intellectua l property right at the date of entry
into force of a treaty, e.g. a patent that has been granted and which remains in
force at that date, within the scope of  "situation that ceased to exist"?
To the extent that acts which occurred be fore TRIPS gave rise to situations which
ceased to exist before TRIPS, Article 70.1 could be said to encompass such situations
indirectly.  The ongoing protection of an intellectual property right at the date of entry
into force of a treaty, e.g. a patent that has been granted and which remains in force at
the date, is not within the scope of a “situation that ceased to exist.”
(d) Assuming that the reply to question (a) is in the affirmative, does Article 70
represent a "contracting out" of this customary rule of international law or
rather does it restate this rule?
Article 70, particularly Article 70.1, merely restates this basic rule of international
law.  This interpretation is supported by the negotiating history of Article 70.1, the
provisions of which were considered by some Members “too obvious to be necessaryto mention.”
2
Q.7 Please provide an analysis of the meanin g that should be attached to the various
provisions of Article 70, in particular, explaini ng the meaning of paragraphs 2, 4 and 6 of
Article 70.  What is the relationship among the paragraphs of Article 70?
Article 70.2
Article 70.2 states that except as otherwise provided in the Agreement, TRIPS “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.”  In the context of
                                                     
2 “10 + 10 Meeting, 16 Dec. 1991: Speaking Note for th e Chairman,” 4.  Attached as U.S. Exhibit 11.WT/DS170/R
Page 42
this case, this provision means that Canada is obligated to apply the provisions of the TRIPS
Agreement to all subject matter that existed and was still protected on January 1, 1996.
“Subject matter” in its ordinary meaning can be defined as “the ground, basis or source of
something,” or “the subject or theme of a book, speech, etc., a topic.”3  In the context of the TRIPS
Agreement, “subject matter” is used to refer to such things as broadcasts that can be copyrighted
(Article 14.3); signs that can be trademarked (Article 15.1); and inventions that can be patented
(Articles 28.1, 31, and 34.1).  In short, “subject matter” as used in the TRIPS Agreement generally
refers to the matter that is or can be entitled to intellectual property protection.  Indeed, this is exactly
how Article 70.2 utilizes the term “subject matter”:  It states that any subject matter that is either
being protected or will meet the criteria for protection at the time of the applicability of the TRIPS
Agreement is subject to the Agreement.
There is no substantive difference between the U.S. and Canadian views of the term subject
matter.  According to Canada, subject matter under Article 70.2 means “matter that is protectable by
intellectual property rights.”4  Thus, both Parties seem to agree that patented inventions are subject
matter.  Under the terms of Article 70.2, TRIPS “gives rise to obligations in respect of all” inventions(“subject matter”) existing on January 1, 1996, “and which [are] protected in that Member on the said
date.”  Accordingly, Canada is obligated to apply the provisions of Article 33 of TRIPS to all patented
inventions ( ie., protected subject matter) that existed on January 1, 1996.
The second sentence of Article 70.2 sets out a different rule that governs copyright
obligations with respect to existing works.  It provides, inter alia , that such obligations “shall be
solely determined under Article 18 of the Berne Convention.”  Article 18.1 of Berne provides that
“This Convention shall apply to all works which, at the moment of its coming into force, have not yet
fallen into the public domain in the country of origin through the expiry of the term of protection.”
According to the negotiating history of Article 70 pr epared by Daniel Gervais, on which Canada relies
so heavily, this provision may be called a “‘relative retroactivity provision,’ in that it applies to
existing subject matter (thus affecting existing arrangements), but with some safeguards.”
5
Article 70.4
Article 70.4 allows WTO members to limit liability for infringing acts to the payment of
equitable remuneration when two conditions are satisfied:  (1) the acts were commenced (or asignificant investment was made) before TRIPS was accepted by the WTO Member in question, and
(2) the acts became infringing under TRIPS.  In this way, the Agreement allows WTO Members to
balance the interests of intellectual property right holders and the interests of parties that may have
engaged in acts which, prior to TRIPS were perfectly legal, yet became infringing under TRIPS.
Article 70.4 thus clearly contemplates that an act in respect of an invention could “become
infringing” under TRIPS.  If - as Canada argues - it has no obligations whatsoever with respect to
intellectual property that existed before 1996,
6 then Article 70.4 is a nullity.  This cannot be correct,
and flies in the face of normal principles of treaty interpretation.
                                                     
3 The New Shorter Oxford English Dictionary, 3119 (1993).
4 First Oral Presentation of Canada, para. 67.
5 Daniel Gervais, The TRIPS Agreement: Drafting History and Analysis, 268 (1998) (parenthetical in
original; emphasis added).
6 First Written Submission of Canada, para. 113 (patents “issued prior to January 1, 1996 . . . are not
subject to the obligations in the TRIPS Agreement.”).WT/DS170/R
Page 43
Article 70.6
This paragraph of Article 70 provides that Members are not obligated to apply the
compulsory licensing disciplines of Article 31 of the Agreement, or to comply with the prohibition on
discrimination by field of technology, with respec t to compulsory licenses granted by the government
before the date on which the TRIPS Agreement became known.  This provision was important to
some members that had relied on compulsory licensing in the past.  Without it, under Article 70.2, the
TRIPS disciples in Article 31 would have applied to existing subject matter (including patentable
inventions) as of 1996, and WTO Members would have had to ensure that all of their compulsory
licenses were modified if necessary to comply with the requirements of Article 31.  Under Canada’s
argument, that it has no obligations whatsoever with respect to patents that existed prior to 1996,
Article 70.6 is wholly redundant.
Relationship between all of the paragraphs in Article 70
Article 70.1 provides that TRIPS “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.”  Notably, theterm used in Article 70.1 is “acts”, not “subject matter.”  Reading Articles 70.1 and 70.2 together, it is
evident that the Agreement does not give rise to obligations regarding acts that occurred before
January 1, 1996, but it does give rise to obligations concerning subject matter that might have existed
before January 1, 1996 (if that subject matter existed on January 1, 1996 and was protected on that
date).  Article 70.1 thus does not prevent the prospective application of TRIPS standards, includingthe standard governing the length of patent terms, to existing subject matter as mandated by
Article 70.2.
Article 70.1 cannot be interpreted without considering its relationship with the other
paragraphs of Article 70.   Under Canada’s reading advanced in its First Written Submission and FirstOral Statement, Articles 70.2 and 70.4 are meaningless, and Article 70.6 is completely redundant.  By
contrast, under the U.S. interpretation described above and in our previous submissions, every
provision of Article 70 is given effect, and the entire article is internally consistent and logical.
II. REPLIES TO QUESTIONS FROM THE PANEL TO THE UNITED STATES
Q.8 *The last sentence of Article 1.1 states that Members shall be free to determine the
"appropriate method" of implementing the provisions of the TRIPS Agreement within theirown legal system and practice.  How do you construe the term "appropriate method" as used in
Article 1.1 of the TRIPS Agreement?
The term “appropriate method” does not encompass a method that results in less protection
than required under the Agreement.  As the first part of Article 1.1 declares, “Members shall giveeffect to the provisions of this Agreement.”  The purpose of the last sentence of Article 1.1 is to make
clear that Members have flexibility to implement their obligations within the context of their own
domestic legal system.  For example, implementing a particular TRIPS provision might require
legislative changes in some WTO Members, while other Members might only have to amend their
administrative regime.  So long as the relevant obligation is indeed fully implemented and has a soundlegal basis in a Member’s legal regime, the precise method of implementation is left to the discretion
of that Member.
If Canada’s method of implementing a twenty-year patent term differed from that of the
United States, but nevertheless provided to each and every patent applicant a sound legal basis for aminimum twenty-year term, there would be no issue under the TRIPS Agreement.  Canada, however,
has not provided a twenty year term by a different method; instead, for many patent holders, it has
failed to provide a twenty year term at all.WT/DS170/R
Page 44
Q.9 *Canada stated in paragraph 80 of its first written submission that the substantive
equivalence of the two terms of protection under the old Act and the new Act appears to have
been accepted by the parties to NAFTA, i.e. th at NAFTA appears to recognize the substantive
equivalence of the two methods of calculating the term.  Please comment.
Canada is incorrect in its assessment that the separation of two different patent terms in the
NAFTA text with the word “or” necessarily implies that these two terms are equivalent.  The text of
NAFTA Article 1709(12) does not explicitly describe the two terms as being substantively equivalent.
NAFTA allows the parties to that Agreement to choose which patent term they would provide, and
thereby requires a lesser degree of harmonization among the parties regarding the length of patent
terms than does the TRIPS Agreement.
Second, it is significant that TRIPS does not contain the same language as the NAFTA.
Indeed, given the disparate practice among the negotiating countries in the calculation of patent term
prior to conclusion of the TRIPS Agreement, the f act that the negotiators agreed on a single standard
in Article 33, and did not include a choice among alternative terms, is significant.  As described byDaniel Gervais,
“The question of the term of protection was a difficult subject during the negotiation,
but right holders should welcome the harmonization made possible by the TRIPS
Agreement.  Previously, the term of protection was sometimes calculated from grant,and in other cases from filing.  For reasons that included the different starting date of
the calculation, the term varied from one country to another.  The single standard
chosen here is 20 years from filing.”7
Q.10 If a Member put in place a system in which patent applicants were in complete control
of the timing of the prosecution of their applic ations, and they were able to ensure that the term
of protection did not expire less than 20 years from the date of filing, would that be sufficient for
a Member to satisfy its ongoing obligation under Article 33 even if it had a much shorter term
from grant?
No.  To take an extreme example, the hypothetical situation described in the question could
arise in a Member with a patent term of one day from grant.  In such a situation, the patent applicantwould receive the exclusive rights related to a patent for only one day.  The purpose of the
requirements in Article 62.4 and 41.2 was to prevent such a situation.  These obligations of the
Agreement must be read together, not in isolation.  The term of protection required to be provided in
Article 33 presupposes reasonable procedures for the acquisition of patent rights, such that the
requirement of a twenty year term of protection is not rendered a practical nullity.
Q.11 *How do you define the term "acts" in Article 70.1?  Does the term "acts" in
Article 70.1 include the administrative act of granting a patent by a patent office?
See U.S. Response to Question 7, above, regarding Article 70.1.  The New Shorter Oxford
English Dictionary defines the term “acts” as “a thing done; a deed.”
8  This general meaning is
consistent with the use of the term “acts” in other provisions of the TRIPS Agreement ( see
Articles 14, 22, 26, 28, 36, 37, 50, and 58).  By its plain meaning, “acts” would include the
administrative act of granting a patent by a patent office.  The United States does not argue that
Canada is in violation of its TRIPS obligations as a result of the failure of the Canadian Patent Officeto grant to all patent holders prior to 1996 patents with  a term of at least twenty years from filing.  The
                                                     
7 Gervais, 169 (emphasis added).
8 New Shorter Oxford English Dictionary, 21.WT/DS170/R
Page 45
“acts” of Canada’s Patent Office prior to 1996 are not at issue.  Rather, Canada’s violation of the
Agreement stems from its failure, since the date of application of the TRIPS Agreement, to extend the
term of protection for existing patented inventions to  at least twenty years from filing.  This violation
is unrelated to any pre-96 “act,” but is related only  to the subject matter (p rotected inventions) that
existed on 1-1-96.  The rule in Article 70.1, that pre-1996 acts are not subject to the obligations in theAgreement does not imply that subject matter existing on January 1, 1996, is also not subject to the
obligations of the Agreement.
Q.12 *(follow up question)  In Article 58 the word  "act" is used in connection with competent
authorities.  Is this broader th an the definition you provided?
No.  See U.S. Response to Question 11.  As stated by the U.S. representative during the first
meeting of the Panel, the United States’ answers at that meeting to the Panel’s questions were
preliminary.  While the United States regrets the n eed to modify these answers, it retained its full
rights to do so.
Q.13 *How do you define the term "subject matter" in Article 70.2?
See U.S. Response to Question 7.
Q.14 The Appellate Body stated in Japan – Taxes on Alcoholic Beverages  that "the essence of
subsequent practice in interpreting a treaty has been recognized as a 'concordant, common and
consistent' sequence of acts…which is sufficient to establish a discernable pattern implying the
agreement of the parties regarding its interpre tation".  Is the fact that six WTO Members,
including the United States, amended their laws to provide a patent term of 20 years from the
date of filing sufficient to support a claim that there was a "concordant, common and consistent
sequence of acts"?  In your response, please consider the matters raised in paragraphs 72 and73 of Canada's first oral statement.
See U.S. Response to Question 4.  Concordant , common and consistent acts have indeed
established a discernable pattern among WTO Members obligated to apply the TRIPS Agreement as
of 1 January 1996 with regard to the interpretation of Articles 33 and 70.2.  As discussed in the U.S.
Response to Question 4, the United States is aware of no such WTO Member (except Canada) that
fails to provide a patent term of twenty years from filing for all patents in existence on January 1,1996.  At least six of these WTO Members had to amend their law to provide such a term.  Other
WTO Members did not amend their law for the simple reason that they were already in compliance.
In its oral statement (paragraphs 72 and 73), Canada attempts to discount such subsequent
practice by arguing that the circumstances of some of the countries that amended their laws were notthe same as Canada’s.  This point has no relevance.  Regardless of what term those countries changed
from, the key is that they all changed to
 a system that provided a minimum term of twenty years from
the date of filing for all patents existing or pending on January 1, 1996.  By contrast, under Canadian
law, such a term does not apply to all patents existing or pending on January 1, 1996.
Furthermore, Canada discounts the example of Portugal, which in order to implement the
TRIPS Agreement, issued Decree-Law 141/96 on August 23, 1996, to ensure that all patents will
receive a term of protection that lasts either fifteen years from the date of grant or twenty years from
the date of filing, whichever is longer.  Canada argues that Portugal’s actions are not necessarily
evidence of a common understanding of the meaning of the TRIPS provisions.9  I n  m a k i n g  t h i s
                                                     
9 Oral Statement of Canada, para. 77.WT/DS170/R
Page 46
argument, Canada has apparently chosen to ignore Portugal’s own words in the communication sent
to the Dispute Settlement Body:
Portugal and the United States further mutually confirm that, with respect to
developed-country members, Article 70.2 of the TRIPS Agreement requires, amongother things, that the provisions of Article 33 of the TRIPS Agreement be applied to
all patents that were in force on 1 January 1996, and to all patents that are granted
based on applications that were pending on 1 January 1996.
10
                                                     
10 Portugal - Patent Protec tion under the Industrial Property Ac t: Notification of a Mutually Agreed
Solution, WT/DS37/2 (8 Oct. 1996).  Attached as Exhibit 10 to U.S. First Submission.WT/DS170/R
Page 47
ATTACHMENT 1.4
RESPONSES OF THE UNITED STATES TO WRITTEN QUESTIONS
FROM CANADA – FIRST MEETING
(7 January 2000)
Q.1 Would the United States please explain why it believes that the rule against retroactivity
contained in TRIPS, Article 70.1 would not be available to Canada in respect of patents issued
before the effective date of the Agreement?
See U.S. Response to Panel Questions 7, 11 and 12.
Q.2 Would the United States please explain why it believes that the rule in TRIPS, Art. 70.2,
which requires retroactivity, would cover previo usly issued patents, since its wording only
refers to “subject matter”?
See U.S. Response to Panel Question 7.
Q.3 Would the United States please describe what, if any, mandated statutory delays
comparable to those in Canada’s old Act were available to patent applicants under UnitedStates patent legislation as it read prior to the Uruguay Round Agreements Act?
The U.S. patent law, as it read prior to the Uruguay Round Agreements Act, did not contain
any “mandated statutory delays,” nor were any a dded by the Uruguay Round Agreements Act.  The
U.S. patent law, however, did and does contain pr ovisions similar to Section 30.2 of Canada’s old
Act.  See 35 U.S.C. §§ 111(4), 133 & 151.  Each of these sections authorizes the Commissioner to
reinstate abandoned applications if, in the case of Section 111(4), the failure to submit the required fee
and oath within the prescribed period can be shown to the Commissioner’s satisfaction to have been
unintentional or unavoidable, and, in the case of Sections 133 and 151, the failure to prosecute the
application within six months of any office action or to pay the required issue fee, respectively, can be
shown to the satisfaction of the Commissioner to have been unavoidable.  The provisions, therefore,
did not and do not provide an applicant with any “mandated statutory delay.”
Furthermore, the United States does not consider the term “mandated statutory delay” to be an
accurate description of Section 30.2 or 73.2 of Canada’s old Act.  There appears to be nothing
“mandatory” about the delay possible in the situations described in those provisions.  Such delay was
hardly mandated in every instance; on the contrary, delays are clearly disfavoured. Under Section30.2, an application can be reinstated only if a delay was “not reasonably avoidable.”
1
                                                     
1 Canadian Patent Act, R.S.C., ch. P-4, § 30.2 (1985).WT/DS170/R
Page 48
Q.4 Where a patent holder has finally forfeited its patent as a result of its failure to pay
maintenance fees during the 20-year period counte d from its application filing date, is the WTO
Member, upon whose territory the application was made, in compliance with its TRIPS
obligations?  Assuming that a patent holder ha s the right, consistent with the Agreement, to
reduce the 20-year period by fail ing to pay maintenance fees after the patent has issued, why
would it not also have a right, consistent wi th the Agreement to reduce the period by taking
steps to expedite the examination and allowa nce process, before the patent had issued?
The WTO Member in the first hypothetical situation may be in compliance with its TRIPS
obligations, depending, inter alia , on the amount of the maintenance fees and the procedures for
paying them.  The second question, however, misses the relevant issue in this case.  The issue is not
the patent holder’s right to forfeit a portion of its patent term (which is undisputed), but rather the
patent holder’s right to a term of protection for the patent that does not end before a period of twenty
years measured from the filing date.  Under Canada’s law, holders of valid patents on subject matter
existing on January 1, 1996, are not provided with a legal right to such a term.  Patent holders can
hardly be said to forfeit something to which they never had a right in the first place.WT/DS170/R
Page 49
ATTACHMENT 1.5
REBUTTAL SUBMISSION OF THE UNITED STATES
(14 January 2000)
Table of Contents
Page
I. INTRO DUCTION ................................................................................................................. ...... 50
II. A TERM OF SEVENTEEN YEARS FROM GRANT IS NOT “EQUIVALENT”
TO A TERM THAT EXPIRES TWENTY YEARS FROM THE DATE OF FILING ......... 50
A. Regardless of the period of “effective protection” provided by Canada,
under Article 33, the term of protection shall not end before the expiration of
twenty years from the filing date ...................................................................................... 50
B. Canada’s equivalence argument rests on an impermissible averaging
methodology between effective periods of pr otection...................................................... 51
III. THE RIGHT TO A TERM OF PROTECTION THAT DOES NOT END PRIOR TO
THE EXPIRATION OF THE TWENTY-YEAR PERIOD FROM THE FILING DATE
WAS NOT “AVAILABLE” TO ALL OLD ACT PATENT APPLICANTS ......................... 53
A. For Old Act applicants, a patent term that did not end before twenty years
from filing has never been available on a sound legal basis in Canada............................ 53
B. Old Act patent applicant with terms of less than twenty years from filing
did not choose to forfeit th eir rights unde r TRIPS............................................................ 54
IV. UNDER TRIPS ARTICLE 70.2, PATENTED  INVENTIONS THAT EXISTED ON
JANUARY 1, 1996, ARE ENTITLED TO A TERM OF PROTECTION OF AT LEAST
TWENTY YEARS FR OM FILING........................................................................................... 55
A. The exemption for pre-1996 acts in Article 70.1 has no relevance
to the requirement to apply TRIPS obligations to existing subject matter
under Article 70.2 ............................................................................................................. 55
B. There is no basis in TRIPS for Canada’s argument that Article 70.2
requires compliance with only some, but not all, of the obligationsin the TRIPS Agreement, with resp ect to existing subject ma tter .................................... 56
V. CONCLUSION..................................................................................................................5 7WT/DS170/R
Page 50
I. INTRODUCTION
1. Under Section 45 of the Canadian Patent Act, the term of protection for patent applications
filed before October 1, 1989 (“Old Act patents”), is seventeen years from the date the patent is
granted.  The TRIPS Agreement requires that Canada grant a term of protection that does not endbefore a period of twenty years from filing to all patented inventions in existence on January 1, 1996.
Because a term of seventeen years from filing will often end before a term of twenty years from grant,
this facial inconsistency between Section 45 and Articles 33 and 70.2 of the TRIPS Agreement
warrants a finding by this Panel that Canada is  in violation of its obligations under TRIPS.
2. Contrary to Canada’s assertion, a patent term of seventeen years from grant is not
“equivalent” to a term of protection that expires twenty years from the date of filing.  Moreover, underthe Canadian patent law, a term of twenty years from filing currently is not available to all owners of
patents that were in existence on January 1, 1996, nor was it available on a sound legal basis to all
such patent owners at the time their applications were filed in Canada.  Finally, pursuant to TRIPS
Article 70, the requirements of the TRIPS Agreement, including the requirement to have a term of
protection that does not end before a period of twenty years from filing, are applicable to all ofCanada’s so-called Old Act patented inventions in existence today, regardless of whether Canada’s
Patent Office had previously engaged in acts inconsistent with current TRIPS obligations.
II. A TERM OF SEVENTEEN YEARS FROM GRANT IS NOT “EQUIVALENT” TO A
TERM THAT EXPIRES TWENTY YEARS FROM THE DATE OF FILING
3. By Canada’s own admission, approximately 67,000 Canadian patents exist today with a term
that will end before a period of twenty years from filing.
1  On January 1, 1996, the number was even
higher: approximately 94,000 patents were in existence with terms that ended before  twenty yearsfrom filing.
2  These key facts alone refute Canada’s first argument regarding the alleged
“equivalency” of a term of seventeen years from grant and a term of twenty years from filing.  For atleast 94,000 patent owners, the patent term prov ided under Canadian law on January 1, 1996, would
end before the period stipulated in TRIPS.
4. In an apparent attempt to diminish the legal significance of its admission regarding the tens of
thousands of patents in existence with terms that will end before a period of twenty years from filing,
Canada reads into Article 33 the concept of an “effective” period of protection, and reads out of
Article 33 the literal text of the provision.  In lieu of the plain language of Article 33, Canada bases itsequivalency argument exclusively on what it variably calls the “effective” period of protection or the
period of “exclusive privilege and property rights.”
3  According to Canada, it has satisfied Article 33
because its “effective” period of protection under a term of seventeen years from grant is at least as
long as the average “effective” period of protection under its regime of twenty years from filing
(because of an average five-year pendency period for patents).  Two fatal flaws exist in this
equivalency argument.
A. REGARDLESS OF THE PERIOD OF “EFFECTIVE PROTECTION ” PROVIDED BY CANADA , UNDER
ARTICLE  33, THE TERM OF PROTECTION SHALL NOT END BEFORE THE EXPIRATION OF TWENTY
YEARS FROM THE FILING DATE
5. The text of TRIPS Article 33 does not refer to the “effective” period of protection, or the
period of “exclusive privilege and property rights,” but rather to the date that the term of protection is
                                                     
1 First Submission of Canada, para. 45 (citing 66,936 such patents).
2 First Submission of Canada, para. 43 (citing 93,937 such patents).
3 See, e.g.,  First Submission of Canada, paras. 68 and 74; First Oral Presentation of Canada, para. 13.WT/DS170/R
Page 51
to end.4  In violation of the Appellate Body’s repeated direction to give primary significance to the
words of the Agreement,5 Canada would read the plain language of TRIPS Article 33 right out of the
Agreement, and substitute the concept of “effective protection” for the existing text.
6. Canada would have this Panel find -- in direct  contradiction with the plain language of TRIPS
Article 33 -- that a system under which a term of protection may (and often does) end before a period
of twenty years from filing nevertheless does not violate Article 33.  There is no basis in the TRIPS
Agreement for such a finding.  The plain language of Article 33 must govern the resolution of this
dispute.
7. In interpreting the WTO agreements, the Appellate Body and previous panels have
consistently looked to the Vienna Convention on the Law of Treaties  for guidance and clarification.6
Article 31(1) of this Convention states:
A treaty shall be interpreted in good faith in accordance with the ordinary meaning to
be given to the terms of the treaty in their context and in the light of its object and
purpose.
Thus, the text of an agreement is often the best expression of the intentions of the parties.7  I n the
words of the Appellate Body, “The proper interpretati on of [a provision] is, first of all, a textual
interpretation.”8
8. Canada has sought to avoid and modify the clear language of Article 33 by relying onArticle 62.
9  Article 62.2 contains a separate obligation -- that of ensuring that the period of protection
is not unjustifiably curtailed by unreasonable procedures.  Article 62.2 addresses the issue of the
commencement of the term of protection, and does not address the expiration date of the period of
protection.  Article 33 of course must be considered  in context, and that context includes Article 62.2
of TRIPS; however, Article 62.2 does not warrant attributing a meaning to Article 33 that conflicts
with its explicit terms.  Canada is incorrect in its assertion that, because of the average five-year
pendency period of New Act patents with a term of twenty years from filing, fifteen years of
“effective protection” is all that is required under Article 33.  Article 33 means what it says.  Under
Article 33, regardless of the period of “effective protection”, the term of a patent shall not end before
a period of twenty years from its filing date.
B. CANADA ’S EQUIVALENCE ARGUMENT RESTS ON AN IMPERMISSIBLE AVERAGING
METHODOLOGY BETWEEN EFFECTIVE PERIODS OF PROTECTION
9. The second fundamental flaw in Canada’s equivalency argument is that it relies on the
“normal or average” period of “effective” protection or “exclusive privilege and property rights” that
                                                     
4 TRIPS Article 33 provides that “The term of protection available shall not end before the expiration
of a period of twenty years counted from the filing date.”
5 See, e.g., Appellate Body report on Japan - Taxes on Alcoholic Beverages , WT/DS8/AB/R,
WT/DS10/AB/R, WT/DS11/AB/R (adopted on November 1, 1996), at 9-10 (“ Japan - Alcoholic Beverages”) .
See also, e.g., Appellate Body report on United States - Standards for Reformulated and Conventional Gasoline ,
WT/DS2/AB/R (adopted May 20, 1996), at 16-17 (“ United States - Reformulated Gas ”); panel report on United
States - Reformulated Gas , WT/DS2/R (adopted May 20, 1996), para. 6.7.
6 See Sources cited supra , note 5.
7 Ian Brownlie, Principles of Public International Law  (4th ed.), at 627.  See also Appellate Body report
on Japan - Alcoholic Beverages , at 11-12.
8 Appellate Body report on Japan - Alcoholic Beverages , at 19.
9 First Oral Presentation of Canada, paras. 18-19.WT/DS170/R
Page 52
Canada currently provides to New Act patentees.  Throughout its First Written and Oral Statements,
Canada repeatedly and explicitly justifies the period of protection under its seventeen-years-from-
grant patents by comparing it to the “normal or average” period of “effective” protection under its
twenty-years-from-filing patents.10
10. Canada uses the averaging methodology in two ways .  First, it claims that since five years is
the “normal or average” pendency period for New Act patent applications, the effective term of
protection under a regime of twenty years from filing would “normally” be an “average” of fifteen
years, which is less than the seventeen year period provided under the Old Act.11  Canada also uses
the averaging methodology to make the opposite comparison -- ie., 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.12  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.  Every Old Act patent that pended for less than three years before being
issued by Canada has a term that ends before a period of twenty years from the date of filing.  Canadaadmits this fact,
13 yet insists on using this averaging methodology to justify its claim of equivalency.
11. The United States has already noted that such averaging methodology is inappropriate.
Indeed, as explained by the panel in United States - Section 337 of the Tariff Act of 1930 :
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
contracting party, on the ground that it accords more favourable treatment in some
other case, or to another contracting party.  Such an interpretation would lead to greatuncertainty about the conditions of competition between imported and domestic
products and thus defeat the purposes of Article III.
14
12. After the Panel in this case pointed out th e inconsistency of an averaging methodology with
the Panel Report in the  Section 337  case,15 Canada appears to have shifted its argument slightly.  In its
answer to the Panel’s question, Canada departs from its previous references to “normal or average”
pendency times, and cites only the fact that the majority of New Act patents (89%) confer a lesserperiod of “exclusive privilege and property rights” than patents with a term of seventeen years from
grant.
16  While Canada’s excessively long examination period for New Act patents is not at issue in
this dispute, it can hardly provide justification for Canada’s failure to provide a TRIPS-consistent
term to all Old Act patentees.  More importantly, this argument is still inconsistent with the principles
set forth in the Section 337  case.  Under the principles of the Section 337  report, even the “mere
                                                     
10 First Submission of Canada, para. 81 (“normal or average”).  S ee also  First Submission of Canada,
paras. 76 (“normal or average”)-77; First Oral Pres entation of Canada, para. 21 (“normal or average”); and
Canada’s Response to Panel Question 22, at 38-39.
11 First Submission of Canada, paras. 76 (“normal or average”) -77(noting that “any particular case”
may diverge from the average), 81 (“normal or average”).   See also  First Oral Presentation of Canada, para. 21
(“normal or average”); Canada’s Response to Panel Question 22, at 39.
12 First Submission of Canada, paras. 72-73, 81.  See also  Canada’s Response to Panel Question 16,
at 32.
13 First Submission of Canada, para. 64.
14 GATT panel report on United States - Section 337 of the Tariff Act of 1930 , BISD 36S/386 (adopted
November 7, 1989), para. 5.13 (“ United States - Section 337 ").
15 Panel Question 21.
16 Canada’s Response to Panel Question 21, at 37.WT/DS170/R
Page 53
potential” of a measure to deny rights under the Agreement would result in a violation.17  Far beyond
having the mere potential to deny rights to patent holders under Article 33 of TRIPS, Canada’s system
actually has denied such rights, on January 1, 1996, to approximately 94,000 patent holders, and today
denies them to almost 64,000 patent holders.  Th ese patentees cannot be dismissed as “exceptional” as
Canada attempts to do in its response to the Panel’s Question on this point.
III. THE RIGHT TO A TERM OF PROTECTION THAT DID NOT END PRIOR TO THE
EXPIRATION OF THE TWENTY-YEAR PERIOD FROM THE FILING DATE WAS
NOT “AVAILABLE” TO ALL OLD ACT PATENT APPLICANTS
13. Somewhat inconsistently with its argument that a twenty-year term of protection is actually
provided to Old Act patentees, Canada also argues that such a term was at least available to them
because of the possibility of manipulating the pendency periods of applications that resulted in suchpatents.  Canada does not dispute the fact that a term of protection of twenty years from filing is not
available now to all Old Act patentees.  Furthermore, such a term was not available on a sound legal
basis to all such patent applicants in the past.  Finally, Old Act patentees cannot be said to have
voluntarily chosen to forfeit their rights to a TRIPS-level term of protection during a time when
TRIPS rights did not exist, and when obtaining such a term would have required many applicants toforego a portion of the early years of protection to which they were entitled under the Old Act.
A. F
OR OLD ACT APPLICANTS , A PATENT TERM THAT DID NOT END BEFORE TWENTY YEARS
FROM FILING HAS NEVER BEEN AVAILABLE ON A SOUND LEGAL BASIS IN CANADA
14. Canadian law provides no sound legal basis for patent applicants that filed applications before
October 1, 1989, to obtain a term of protection that did not end before a period of twenty years from
the filing date.  Neither of the provisions of law cited by Canada -- Sections 30(1) and 73 of the Old
Act -- provided such a basis.
15. According to Canada, an Old Act applicant coul d obtain a term of twenty years from filing by
actually abandoning its patent application not once,  but twice.  Then, 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.  By means of such a
tortured and highly non-transparent process, Canada argues that it has satisfied its TRIPS obligation to
provide a patent term that does not end before twenty years from filing.18
16. Section 30(2) of the Old Act does not provide a sound legal basis for the procedure outlinedby Canada -- repeatedly abandoning and reinstating a patent application for purposes of delay.
Section 30(2) of the Old Act declares in no uncertain terms that the reinstatement of an abandoned
patent application would only be permitted if a delay “was not reasonably avoidable.”
19  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 wasreasonably avoidable.
17. In response, Canada essentially argues that its patent examiners routinely ignore the
mandatory provisions of Section 30(2), asserting that its Patent Commissioner is unaware of
reinstatement ever having been refused.
20  Regardless of the practices of Canada’s patent examiners,
                                                     
17 United States - Section 337, para. 5.14.
18 First Oral Presentation of Canada, paras. 43-44.
19 Canadian Patent Act, R.S.C., ch. P-4, § 30(2) (1985).  Canada Exhibit 16.
20 First Oral Presentation of Canada, para. 47.  Canada then hedges by concluding that if a
reinstatement was disallowed, an applicant could simply have reapplied.  Canada thus states the obvious, that aWT/DS170/R
Page 54
however, Section 30(2) unambiguously requires that reinstatement be denied where delays were
reasonably avoidable.
18. Canada’s arguments here are similar to those rejected by the Panel and Appellate Body in
India - Patent Protection for Pharmaceutical and Agricultural Chemical Products .21  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 the Indian Patents Act that required the Patents Controller to reject such applications.22
During appeal, the Appellate Body looked specifically at the provisions of India’s Patents Act, anddecided:
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. . . .
We are not persuaded by India’s explanation of these seeming contradictions.
Accordingly, we are not persuaded that India’s “administrative instructions” wouldsurvive a legal challenge under the Patents Act.  And, consequently, we are not
persuaded that India’s “administrative instructions” provide a sound legal basis to
preserve novelty of inventions and priority of applications as of the relevant filing and
priority dates.
23
Likewise in this dispute, Section 30(2) of the Old Act is mandatory in that abandoned applications canbe reinstated only where the delay was “not reasonably avoidable.”  Thus, the procedure pursuant to
which Canada argues that twenty-year patent terms were available is prohibited by the very statute on
which Canada bases its argument.
B. O
LD ACT PATENT APPLICANTS WITH TERMS OF LESS THAN TWENTY YEARS FROM FILING DID
NOT CHOOSE TO FORFEIT THEIR RIGHTS UNDER TRIPS
19. The obligations of the TRIPS Agreement became applicable to Canada on January 1, 1996,
and the right under the Agreement to a period of protection that did not end before the expiration of
twenty years from filing applied as of that date.  Canada argues that on January 1, 1996, it did not
have to extend that right to all owners of patents with terms of less than twenty years from filing,
because such patentees had already forfeited their right to a TRIPS-level term of protection.  A right,however, cannot be knowingly forfeited before it comes into existence.
20. Canada attempts to characterize all patent hol ders with TRIPS-deficient terms of protection as
having made a strategic choice in favor of such deficient terms.  This characterization is inaccurate.
Canada provides no persuasive reasoning as to why applicants would go through the convolutedprocess it described (even if its availability were apparent) and suffer the additional costs involved in
twice abandoning and reinstating an application, and then forfeiting and restoring the same
application.  Rather, Canada acknowledges the difficulty of providing a “coherent or straightforward
theory” on this point.
24
                                                                                                                                                                    
patent applicant could repeatedly file and abandon a pate nt application forever, thereby ensuring that a patent is
never granted.  The availability of such a procedure, however, is of no relevance to the term of protection.
21 WT/DS50/AB/R (adopted January 16, 1998).
22 Id., paras. 67-71.
23 Id., paras. 69-70.
24 Canada’s Response to Panel Question 24(c), at 44.WT/DS170/R
Page 55
21. Furthermore, under Canada’s Old Act, patent applicants whose applications would ordinarily
be issued in less than three years would have had access to a TRIPS-level term of protection only if
they were willing to forfeit a portion of the early years of patent protection to which they were entitled
under the Old Act.  In other words, under the Old Act, Canada attached conditions to the supposedly
available term of twenty-years-from-filing that for ma ny patent owners would have resulted in a lesser
“effective” period of protection.  For instance, a patent applicant with a two-year pendency period
would be entitled under TRIPS to an “effective” period of protection of eighteen years.  Whereas
under Canada’s Old Act, to obtain the TRIPS-level of protection, the applicant would have had to
prolong the pendency period of its patent for an additional year, and thereby forfeit one year of
effective protection.  Many applicants would not have made this choice, and should not have had to
forego any portion of the patent term merely to obtain a term that does not end before twenty years
from filing.
22. Articles 41.2 and 62.4 of the Agreement provide important guidance on this issue.  The highly
complicated procedure described by Canada would have imposed significant unnecessary costs on
many patent owners, in violation of the basic TRIPS requirement that procedures for the acquisition
of patent rights not be unnecessarily complicated or costly, or entail unwarranted delays.  ReadingArticle 33 in context with Articles 41.2 and 62.4 of the Agreement, it is apparent that Canada’s
alleged system of making available a term of protection of twenty years from filing is wholly
inadequate to comply with its obligations.
IV. UNDER TRIPS ARTICLE 70.2, PATENTED INVENTIONS THAT EXISTED ON
JANUARY 1, 1996, ARE ENTITLED TO A TERM OF PROTECTION OF AT LEAST
TWENTY YEARS FROM FILING
23. The text, context, object and purpose of Articl e 70.1, as well as its negotiating history, and the
subsequent practice of WTO Members demonstrate that pre-1996 “acts” do not absolve Members
from the obligation to provide TRIPS-level intellectual property protection – including a patent termof twenty years from filing – to all subject matter existing on January 1, 1996.  The United States has
previously set forth in detail its position regardin g the proper interpretation of TRIPS Article 70 in
paragraphs 10-17 of its First Oral Statement and its Response to Panel Questions 7 and 11-14.  Rather
than repeating those arguments, the United States  will primarily address in this submission the new
arguments raised by Canada, particularly in its response to Panel Questions 6 and 7.
A. T
HE EXEMPTION FOR PRE -1996 ACTS IN ARTICLE 70.1 HAS NO RELEVANCE TO THE
REQUIREMENT TO APPLY TRIPS OBLIGATIONS TO EXISTING SUBJECT MATTER UNDER
ARTICLE 70.2.
24. It is important to note that, despite the focus during these proceedings on the definition of the
terms “acts” and “subject matter” in Articles 70.1 and 70.2, the United States sees little difference
between the Parties regarding these definitions.  Rather, the essence of this dispute stems from thediffering conclusions that the Parties draw from these definitions.
25. According to both Parties, the term “acts” can include both administrative and legislative acts
of governments as well as acts of right holders and third parties.  Such pre-1996 acts could include the
“act” of granting a patent, revoking a patent, infringing a patent or granting a compulsory license on apatent.  These acts themselves are not subjec t to the obligations in the TRIPS Agreement.
26 The positions of Canada and the United States differ primarily with respect to the
implications of this definition of “acts.”  The mere fact that Canada engaged in pre-1996 acts that
denied TRIPS-level protection to certain subject matter, does not mean that Canada is foreverexempted from applying TRIPS obligations to such subject matter.  In the context of patented
inventions, the fact that Canada denied a term of twenty years from filing before TRIPS does notWT/DS170/R
Page 56
mean that Canada is forever exempted from the obl igation to grant a TRIPS-level patent term to such
inventions that existed on January 1, 1996.
27. Of course, pre-1996 legislative and administrative acts (and infringing acts by third parties)
could have negatively affected the rights of patent holders, and could have been inconsistent withTRIPS-standards.  Such acts themselves are not actionable under TRIPS.  The subject matter to which
the acts applied, however, can be eligible for TRIPS-level protection after January 1, 1996.
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.
28. Articles 70.1 and 70.2 are separate provisions that address distinct situations.  Canada argues
that the United States has interpreted  TRIPS Articles 70.1 in a way that renders it “meaningless,” andfails to “resolve” the “apparent conflict” between Articles 70.1 and 70.2.
25  In the view of the United
States, however, there is no conflict -- apparent or otherwise -- between Article 70.1 and Article 70.2.
The “conflict” between these two provisions is apparent only to Canada, and results from Canada’sstrained reading of those provisions.  Furthermore, Article 70.1 is not at all meaningless, but merely
has no relevance in the specific factual circumstances of this case.  Indeed, as we have set forth in ourprevious submissions, it is Canada’s interpretation of Article 70.1 that would render large portions of
Article 70 meaningless or redundant.
29. Canada argues that there must be “compelling reasons presented by the U.S.” to “override the
clear language of Article 70.1.”
26  The United States, however, does not seek to “override” any
language of the TRIPS Agreement, including Article 70.1.  Article 70.1 is simply not relevant to this
particular dispute because the United States is not challenging Canada’s pre-1996 acts.  Again, the
irrelevance of Article 70.1 to this dispute does not imply that Article 70.1 is without meaning and we
have demonstrated in detail in our submissions why our interpretation of Article 70.1 and 70.2 is
logical and consistent with the text, context, object and purpose of Article 70, the negotiating historyof that provision, and the subsequent practice of WTO Members.
30. In sum, the United States does not argue that Canada is in violation of its TRIPS obligations
as a result of the failure of the Canadian Patent Office to grant, before 1996, patents with a term of at
least twenty years from filing.  The “acts” of Canada’s Patent Office prior to 1996 are not at issue, and
indeed, are not subject to TRIPS obligations.  Rather, Canada’s violation of the Agreement stems
from its failure, since the date of application of the TRIPS Agreement, to provide a term of protectionfor existing patented inventions of at least twenty years from filing.  This violation is unrelated to any
pre-1996 “act,” but is related only to the subject matter (protected inventions) that existed on
January 1, 1996.  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 January 1, 1996, is also not subject to the
obligations of the Agreement.
B. T
HERE IS NO BASIS IN TRIPS FOR CANADA ’S ARGUMENT THAT ARTICLE 70.2 REQUIRES
COMPLIANCE WITH ONLY SOME , BUT NOT ALL , OF THE OBLIGATIONS IN THE TRIPS
AGREEMENT , WITH RESPECT TO EXISTING SUBJECT MATTER
31. In response to U.S. arguments in its Oral Statement of 20 December that Canada’s
interpretation of Articles 70.1 and 70.2 would render meaningless other aspects of Article 70, Canada
has clarified that Article 70.2 would apply at least with respect to TRIPS rights under Articles 27.1,
28 and 31(h).  For example, in response to Panel Question 7, Canada made the following statements:
                                                     
25 Canada Response to Panel Question 7, at 25, 27.
26 Canada Response to Panel Question 7, at 25 (third paragraph).WT/DS170/R
Page 57
In the result Canada also understands that, by virtue of paragraph 2 of Article 70 , subject
matter which is ‘novel, inventive and useful’, which was invented and protected before the
application date and which continued to be protected as of that date, would be entitled to
protection by the patent vehicle pursuant to Article 27.1  and to the conveyance of the
exclusive benefits, even if enhanced by TRIPS, bestowed by virtue of Article 28.27
** ** ** **
Patentable subject matter under Article 70.2 would include the obligations set out under
Article 28 to confer certain exclusive rights on a patent owner, and the right to be paid
remuneration under Article 31(h) where a Member sanctioned a use unauthorized by a right
holder for patentable subject matter.28
32. It is significant that Canada concedes that pre-1996 acts do not preclude the application of theobligations in Articles 27.1, 28 and 31(h) to existing subject matter.  Thus, for example, Canada
would apparently agree that if it granted a patent  on an invention in 1993, and if Canadian law
provided only four of the five exclusive rights outlined in Article 28, Article 70.2 would imply that
Canada must grant, as of January 1, 1996, the fifth exclusive right to that patentee.
33. Where Canada and the United States continue to differ is whether Article 70.2 requires
Canada also to apply the TRIPS obligation to provide a patent term of twenty years from filing  to
inventions which enjoy patent protection  on January 1, 1996.  While Canada agrees that WTO
Members are obliged by Article 70.2 to provide TR IPS protections under Articles 27.1,  28, and 31(h)
to subject matter existing on January 1, 1996, Canada argues that the term of protection  applicable to
such subject matter is not covered by Article 70.2.  Canada has not and cannot explain why the TRIPS
obligation involving the term of protection may be properly excluded under Article 70.1 while other
TRIPS obligations, such as the provision of exclusive rights in Article 28, are not.
34. In elaborating its theory of Article 70.2, Cana da places great weight on the argument that a
“patent” is not “subject matter.”
29  The Parties do not appear to be in dispute that existing inventions
(which may already be patented) are subject matter within the meaning of Article 70.2.  Thus,
Canada’s distinction is without any significance in this case.  Patented inventions that existed on
January 1, 1996, are entitled to TRIPS-level protection.  Such TRIPS-level protection includes the
rights provided for in Articles 27.1, 28, and 31 of the TRIPS Agreement, as well as a term of
protection that does not expire before twenty years from filing, as provided in Article 33.
V. CONCLUSION
35. Accordingly, the United States respectfully requests the Panel to find that Canada is not in
compliance with Articles 33 and 70.2 of the TRIPS Agreement, and respectfully requests that the
Panel recommend that Canada bring its law into conformity with these provisions.
                                                     
27 Canada Response to Panel Question 7, at 22 (second full paragraph) (emphasis supplied).
28 Canada Response to Panel Question 7, at 28 (first full paragraph).
29 Canada response to Panel question 7 at 26 (second paragraph).WT/DS170/R
Page 58
ATTACHMENT 1.6
ORAL STATEMENT OF THE UNITED STATES AT THE SECOND MEETING
WITH THE PANEL
(25 January 2000)
I. INTRODUCTION
1. Mr. Chairman, Members of the Panel, Representatives of the Government of Canada, and
members of the Secretariat:  On behalf of the United States delegation, I would like to first thank the
Panel and the Secretariat Staff for your time and continued effort in this case.
2. Despite Canada’s claims to the contrary, and its attempts to make it otherwise, this case
remains “an exceedingly simple one.”
3. The text of TRIPS Article 33 is unequivocally clear:
The term of protection available [for patents] shall not end before the expiration of a
period of twenty years counted from the filing date.
Yet, Canada admits that the terms of protection for forty percent of its Old Act patents that are
presently in existence will end before the expiration of a period of twenty years counted from their
respective filing dates.1  The terms of these patents are therefore inconsistent with the express
obligation of Article 33.
4. The text of TRIPS Article 70.2 is equally unambiguous:
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 . . .
Many of Canada’s Old Act patents were still valid at the time the TRIPS Agreement becameapplicable for Canada on January 1, 1996.  This is uncontested.  Thus, the “Agreement gives rise to
obligations in respect of” the inventions protected by these Old Act patents.  One such obligation is
that of Article 33:  Canada must provide terms of protection that “shall not end before the expiration
of twenty years counted from the filing date” for all such Old Act patents.
5. And because Canada does not meet this obligation for forty percent of its existing Old Actpatents, Canada is therefore in prima facie  violation of Articles 33 and 70.2 of the TRIPS Agreement.
It is really just that simple.
II. REBUTTALS TO CANADA’S ARTICLE 33 DEFENSES
Equivalency
6. Canada has offered two defenses related to Article 33 of TRIPS.  First, Canada claims that
even if a term of seventeen years from grant does in  fact end prior to the expiration of twenty years
                                                     
1 First Submission of Canada, para. 45.WT/DS170/R
Page 59
from filing, in direct contravention of the text of Article 33, there is nevertheless no violation of
Article 33 because in Canada a term of seventeen years from grant is “substantively equivalent” to a
term of twenty years from filing.  There are several major flaws to this argument.
7. This argument reflects an attempt to modify the plain language of Article 33, and ignores that
provision’s command that the term of protection available “shall not end before the expiration of a
period of twenty years counted from the filing date.”  Canada justifies its departure from the text of
Article 33 by citing Article 62.2 to manufacture a so-called “measurement formula” for a period of
“exclusive privilege and property rights.”2  The unambiguous text of Article 33 cannot be so lightly
dismissed.  No such “measurement formula” can justify ignoring the explicit text of Article 33 and
nothing in Article 62.2 justifies Canada’s failure to make available to all right holders a patent term
that does not end before twenty years from filing.  Under Article 33, regardless of the period of“exclusive privilege” provided by a patent, the patent term available to right holders at a minimum
“shall not end” before a period of twenty years from filing.
8. By using Article 62.2 to attribute a meaning to Article 33 that conflicts with the latter’s
explicit terms, Canada fails to respect the ruling of the Appellate Body “to take adequate account ofthe words actually used” in a provision.
3  Canada’s interpretation would render meaningless the
phrase “shall not end . . . ” in Article 33 -- a result that contradicts fundamental principles of treaty
interpretation.  For this reason alone, Canada’s “equivalency” argument must fail.
9. In addition to ignoring the text of Articl e 33, Canada also employs an impermissible
averaging methodology to argue that a term of seventeen years from grant is “substantively
equivalent” to a term of twenty years from fili ng.  In our Rebuttal Submission, we cited the many
times that Canada references “normal or average” pendency periods for its patents.4  These normal or
average pendency periods are the basis from which Canada makes its comparison between the period
of “effective protection” provided under its regime of seventeen years from grant and the periodprovided under a term of twenty years from filing .  Canada’s averaging methodology is flawed in that
it (by definition) does not take into account patents whose actual pendency periods diverge
significantly from the average.  This methodology is flatly inconsistent with the panel decision in the
Section 337  case, a fact that Canada has yet to reconcile.
5
10. Furthermore, Canada’s methodology of comparing “effective” terms of protection based on
average pendency periods would defeat the object and purpose of Article 33.  Article 33 was intendedto harmonize patent terms around a system of twenty years from filing.
6  Under Canada’s reasoning,
WTO Members need not provide a patent term of twenty years from filing, so long as they provide a
term from grant that relates to the average pendency periods in their respective countries.  For
example, a term of seventeen years from grant would be TRIPS-consistent for countries with average
pendency periods of three years or more, but not for countries with average pendency periods of lessthan three years.  This interpretation runs dire ctly contrary to the TRIPS negotiators’ goal of
achieving what Canada itself describes as the “harmonization of the term of protection among
member states.”
7
                                                     
2 Second Submission of Canada, para. 3.
3 Appellate Body report on United States - Standard for Reformulated and Conventional Gasoline ,
WT/DS2/AB/R (adopted May 20, 1996), at 17.
4 Rebuttal Submission of the United States, paras. 9 & 10.
5 See GATT panel report on United States - Section 337 of the Tariff Act of 1930 , BISD 36S/386
(adopted November 7, 1989), para. 5.13.
6 Daniel Gervais, The TRIPS Agreement: Drafting History and Analysis, 169 (1998).
7 First Oral Presentation of Canada, para. 55.WT/DS170/R
Page 60
Availability
11. In addition to its “equivalency” argument, Canada  also claims that it is not in violation of
Article 33 because a term of twenty years from filing was “available” to patent holders by means of
delay tactics in patent application prosecution.  By not “taking advantage of” these delay tactics,Canada argues, the applicants essentially “waived” their right to a patent term of twenty years from
filing.
8  This argument too has fundamental flaws.
12. First of all, it is uncontested that all Old Act patents were based on patent applications filed
prior to October 1, 1989.  It is similarly uncontested that the obligation to provide a patent term of
twenty years from filing did not arise for Canada until the TRIPS Agreement became applicable on
January 1, 1996.  Thus, it was impossible for Old Act applicants to have knowingly waived theirrights under TRIPS to a term of twenty years from filing.  Moreover, since certain Old Act applicants
– whose patents would be granted in less than three years – would have had to forego a period of
effective protection in order to obtain a term that did not end before twenty years from filing, the
“choice” that Canada made available to patent applicants was hardly that contemplated by Article 33.
13. In support of its position that a patent term of  twenty years from filing was available to Old
Act applicants, Canada repeatedly points out that sixty percent of Old Act patents have terms that
exceed twenty years from filing.  This statistic, how ever, proves nothing about the availability of a
term of twenty years from filing to all Old Act applicants.  It is just as significant that forty percent of
Old Act patents have terms that end before twenty years from filing.
14. Second, the incredibly convoluted delaying tactics described by Canada - - twice abandoning
an application and then reinstating it each time, and then forfeiting the application and restoring it
again -- have no sound legal basis.  Following the Appellate Body’s guidance in the India - Patent
Protection  case,9 the United States -- in paragraphs 14 to 28 of our rebuttal submission -- examined
the relevant provisions of the Old Act as they relate to such delay tactics.  In doing so, we noted that
there is no legally guaranteed right for an applican t to use such tactics to obtain a patent term of
twenty years from filing.  Section 30(2) of Canada’s Old Act permitted the reinstatement of
abandoned applications if “the failure to complete or prosecute the application within the time
specified was not reasonably avoidable.”10  In other words, a patent applicant that had abandoned an
application had no legal right to reinstate that application if the applicant engaged in reasonably
avoidable delays.  The fact that the Chairman of Canada’s Patent Appeals Board is aware of no casesof delays being refused is of no legal consequence, and does not change the plain text of the Canadian
law.
15. Canada attempts to bolster its argument regarding these delay tactics by asserting that “similar
rules exist under US patent legislation.”
11  This comparison only highlights the weakness in Canada’s
argument.  The U.S. patent law does contain a rule similar to Section 30(2) of Canada’s Old Act.
Like Canada’s Section 30(2), the U.S. provision is not available to anyone for the asking.  Rather, it
provides that patent applications can be reinstated only where a delay was “unavoidable”.Furthermore, under U.S. law, patent applicants need not engage in any delaying tactics to obtain a
patent term that does not end before twenty years from filing.  Rather, all applicants and current patent
owners have a legal right to such a term under U.S. law – even where they chose not to repeatedly
abandon and forfeit their patent applications.
                                                     
8 Second Submission of Canada, para. 29.
9 See Appellate Body report in India - Patent Protection for Pharmaceutical and Agricultural
Chemical Products , WT/DS50/AB/R (adopted January 16, 1998), paras. 66, 69, and 70.
10 Canadian Patent Act, R.S.C., ch P-4, section 30(2) (1985).  Canada Exhibit 16.
11 Second Submission of Canada, para. 33.WT/DS170/R
Page 61
16. Finally, it is interesting to note the inconsistency between Canada’s argument regarding the
“availability” of a twenty-year patent term with Canada’s argument that such a term is actually
provided under Canadian law.  One might wonder wh y, if the two terms were indeed “equivalent,” an
Old Act patent applicant would have to delay the date of grant to obtain a twenty year term.  The
obvious answer is that a term of twenty years from filing is not in fact provided under Section 45 ofthe Canadian Patent Act.
III. REBUTTALS TO CANADA’S ARTICLE 70 DEFENSE
17. Canada’s final defense in this case rests upon Article 70.  Article 70.2, by its terms, requires
WTO developed-country Members to apply the obligations of the TRIPS Agreement - - all of the
obligations of the TRIPS Agreement - - to inventions that were patented on January 1, 1996.
Article 70.1 does not diminish this requirement or provide otherwise.  By contrast, Canada’sinterpretation of Article 70.2 of TRIPS is inconsistent with the text of that provision, its context,
object and purpose, its negotiating history, as well as the subsequent practice of every other WTO
developed-country Member.
18. The text of Article 70.2 is the key to its interpretation.  The plain language of this provision
indicates that the obligations of the TRIPS Agreement apply to all “subject matter” existing on
January 1, 1996, “which is protected” on that date.  An invention is subject matter.  A patent is a form
of intellectual property protection.  In short then, Article 70.2 requires the obligations of TRIPS to be
applied to existing patented inventions.
19. Canada attempts to cloud the interpretation of this straight-forward provision by placing great
weight on the distinction between a patent and the subject matter protected by a patent.  This
distinction has no effect on the interpretation of Article 70.2.  Quite simply, the TRIPS obligations
must be applied to patented inventions.  Along the same lines, Canada appears to argue in its Second
Submission that “patented subject matter” is not “subject matter.”
12  Given that Article 70.2 applies to
“subject matter . . . that is protected,” Canada’s distinction again has no significance.
20. Apart from these irrelevant semantic distinctions under Article 70.2, Canada’s Article 70
defense rests on a sweeping interpretation of Article 70.1.  As described in the Rebuttal Submission of
the United States, Article 70.1 applies to all “acts” which occurred before the date of application of
TRIPS to Canada.  Such acts can be those of private parties or acts of government authorities.  In our
previous submissions, the United States has pr ovided numerous examples of the acts covered by
Article 70.1 and the effect of that provision.13
21. In the context of this case, Article 70.1 means that Canada is not today in violation of the
TRIPS Agreement for its failure to make available, before 1996, patent terms of twenty years from
filing to all applicants.  The U.S. is not arguing that Canada’s physical acts of granting patents withterms of seventeen year from grant back in the early 1990's violate TRIPS.  This concept may seem
obvious - - and indeed, to many TRIPS negotiators, it  was.  As noted in the U.S. Answer to Panel
Question 6.d., during the TRIPS negotiations, some countries thought Article 70.1 stated a concept
“too obvious” to be included in the Agreement.  The negotiating history does not support Canada’s
position that Article 70.1 in effect represents a sweeping and complex exemption from the provisionsof Article 70.2.
                                                     
12 Second Submission of Canada, para. 51.
13 E.g., First Oral Statement of the United States, para. 14, U.S. Response to Panel Question 11,
Rebuttal Submission of the United States, para. 25.WT/DS170/R
Page 62
22. The United States’ complaint before this Panel is not based on any pre-1996 act of any
Canadian authority.  Rather, it is based on Canada’s failure, as of January 1, 1996, to apply
prospectively the obligations of TRIPS to all patented subject matter that existed on January 1, 1996.
Article 70.1 has no effect on this particular case, and no relevance to it.
23. More specifically, the mere fact that Canada engaged in pre-1996 acts that denied TRIPS-
level protection to certain subject matter, does not mean that Canada is forever exempted from
applying TRIPS obligations to such subject matter.  In the context of patented inventions, Canada’s
failure prior to 1996 to make available to all applicants a term of twenty years from filing, does not
mean that Canada is excused from the obligation to grant a TRIPS-level patent term to patented
inventions that existed on January 1, 1996.
24. Canada’s contrary interpretation of Article 70.1 is unsupported by the context, object and
purpose of Article 70.  In this regard, Canada first attempted to convince this Panel that all the
obligations of TRIPS do not apply to patents granted prior to January 1, 1996.  To quote Canada’s
First Submission: “patents issued prior to January  1, 1996 are not subject to the obligations in the
TRIPS Agreement.”14  Such a far-reaching interpretation of Article 70.1 would make several of the
other provisions of Article 70 redundant or meaningless.  It would also completely eviscerate the
protection provided by the TRIPS Agreement for thousands of existing patent holders, with the result
that the legal effect and the benefits of the TRIPS Agreement would not be felt for years into the
future.  This was not the intent of the negotiators of the Agreement, and is not consistent with the
detailed negotiations that accompanied the drafting of Articles 70.2, 70.4 and 70.6.
25. Presumably to avoid such an extreme result, Canada subsequently narrowed its argument, and
now distinguishes between some of the obligati ons in the TRIPS Agreement that would apply to
existing subject matter, and other obligations (such as patent term) that allegedly do not.  There is no
textual basis in Article 70.1 or 70.2 for Canada’s attempt to distinguish between the obligations inTRIPS that will apply to existing subject matter.  The obligations in Articles 27, 28 and 31 of TRIPS
cannot be distinguished from the obligation in Article 33.  Under Article 70.2, Canada must apply all
TRIPS obligations to all inventions that were protected on January 1, 1996.
26. In its Second Submission, Canada attempted to support its distinction between the various
obligations of TRIPS by citing little more than the fact that the obligation concerning the exclusive
rights conveyed by a patent and the obligation concerning the term of a patent appear in differentarticles of the Agreement.  This argument ignores the fact that other patent obligations also are not
merged into one provision, but are set forth in separate articles.  Furthermore, there is no indication
that the drafters of the Agreement intended to limit the application of Article 70.2 merely by the
organization of the patent obligations in TRIPS into separate articles.
Subsequent Practice
27. On a final note, the United States must re-emphasize the highly significant fact that among all
WTO developed-country members (except Canada), there appears to be complete uniformity of
practice regarding the interpretation of Articles 33, 70.1 and 70.2.  Canada has provided no evidence
rebutting the evidence provided in the U.S. First S ubmission on this point.  On the key issue in dispute
- - whether a patent term of at least twenty years from filing must be available for all patents in force
on January 1, 1996 - - every other developed country me mber of the WTO agrees that it must.  Given
the importance of subsequent practice as a guide to interpretation of the treaty provisions under
Article 31(3)(b) of the Vienna Convention, this consensus among other WTO members cannot be
dismissed.
                                                     
14 First Written Presentation of Canada, para. 113.WT/DS170/R
Page 63
IV. CONCLUSION
28. For all of these reasons, the United States respectfully requests that the Panel find that Canada
is in violation of its obligations under Articles 33 and 70 of the TRIPS Agreement, and recommend
that Canada bring its law into compliance with these provisions.WT/DS170/R
Page 64
ATTACHMENT 1.7
RESPONSES OF THE UNITED STATES TO WRITTEN QUESTIONS FROM THE PANEL –
SECOND MEETING
(3 February 2000)
B. AVAILABILITY (ARTICLE 33)
Q.32 Does the TRIPS Agreement permit Members to give patent applicants a choice between
either obtaining protection early, or obtaining a term of protection that expires twenty years
from the filing date?
No. The Agreement mandates that the term of protection available must not end before the
expiration of twenty years from the filing date.  The Agreement also mandates that patents be granted
"within a reasonable period of time so as to avoid unwarranted curtailment of the period ofprotection", and that procedures for the acquisition of patent rights may not be unnecessarily
complicated or costly, or entail unwarranted delays.  The text of the Agreement does not support the
notion that a Member can ignore one obligation simply by fulfilling another.
1  These obligations are
not "either-or" choices.  A Member cannot condition its compliance with one TRIPS obligation on a
patent applicant's willingness to forfeit its rights under another TRIPS provision.
Q.33 If Article 70.2 rendered Article 33 applicable to inventions under protection in
developed country Members on 1 January 1996, would it require those Members to make
available on that date a term of protection for existing patents that did not expire before the end
of 20 years from their respective filing dates or would it be sufficient that that term wasavailable at te time that the patent application was filed?
The text of Articles 70.2 and 33 indicates that it would not be sufficient for a WTO Member
to provide a term of twenty years from filing only at the time that a patent application was filed.
Essentially, such a scenario would read into Articl e 70.2 an exception that does not exist in the text.
The terms of Article 70.2 are unqualified on this point, and require developed country Members to
comply with the TRIPS obligations in respect of inventions under protection on 1 January 1996.  Inthis case, it is undisputed that on 1 January 1996, Canada did not make available to all patent owners a
term of protection that did not end before twenty years from filing.  ON 1 January 1996, an Old Act
patent owner whose patent would expire sooner than  twenty years from filing had no recourse under
Canadian law.  (Moreover, notwithstanding the premise of this hypothetical question, Canada also did
not make this term available on a sound legal basis for every one of its Old Act patent applicants atany time prior to 1 January 1996.)
                                                     
1 See, e.g., GATT panel report on United States  – Section 337 of the Tariff Act of 1930 , BISD 36S/386
(adopted November 7, 1989), para. 5.13.WT/DS170/R
Page 65
Q.34 How can those applicants whose patents were granted before the date of application of
the Agreement be said to have  chosen to forego a later term  when the TRIPS Agreement had
not even been applied?
Those applicants whose patents were granted before the date of application of the Agreement
cannot be said to have chosen to forego a later term when the TRIPS Agreement had not even been
applied.  To have "chosen to forego a later term" necessarily implies that Old Act applicantsknowingly made the decision to waive their right to this later term prior to the granting of their
patents.  Logically, one cannot waive a right that did not exist.  The right to a term of twenty years
from filing did not (and does not) exist for Old Act applicants under Canadian law, and did not exist
under the TRIPS Agreement until its date of application to Canada on 1 January 1996.WT/DS170/R
Page 66
ATTACHMENT 2.1
FIRST SUBMISSION OF CANADA
(2 December 1999)
Table of Contents
I. INTRODUCTION ..................................................................................................................67
II. FACTS ....................................................................................................................... ..............68
A. Treaty Provisions .........................................................................................................68
B. Term of Protection Provisions  in Canadian Patent Law ..............................................69
C. Legislative Contex t and History...................................................................................70
D. The Prosecution of Patent Applications in Canada......................................................72E. Old Act Applications....................................................................................................72F. Old Act Patents  –  Statis tics ........................................................................................74
G. New Act Applications ..................................................................................................75H. New Act Patents  –  Statistics.......................................................................................76
III. POINTS IN ISSUE............................................................................................................ ......77
IV. SUBMI SSIONS ................................................................................................................. ......77
A. The Root Cause of the Matters in Dispute ...................................................................77
B. The Term of Exclusivity Privilege under Section 45 and Article 33 is
Equivalent ..................................................................................................................... ............78
C. Section 45 Does Not Now, nor Did it Ever, Require that the Term ofProtection End Before the Expiry of a Period of Twenty Years Counted from theFiling Date .................................................................................................................... ............80
D. Article 70................................................................................................................... ...84
E. Conclusion................................................................................................................... .87
V. DISPOSITION REQUESTED...............................................................................................87WT/DS170/R
Page 67
I. INTRODUCTION
1. In these proceedings the United States of America (US) challenges the conformity of the
provisions of the Canadian Patent Act  (Act) respecting the duration of the term of protection accorded
to certain Canadian patents with the minimum standard for that term prescribed by Article 33 of theAgreement on Trade-Related Aspects of Intellectual Property Rights  (variously referred to as:
TRIPS, the Agreement or the TRIPS Agreement).
2. The US notes that the term of protection granted to patents issued on the basis of patent
applications filed before October 1, 1989 is defined, pursuant to section 45 of the Act, to be seventeen
years from the date on which such a patent is issued.  On this basis the US advances the allegation that
this provision of Canadian patent law is inconsistent with Canada’s obligations under the TRIPSAgreement, including but not necessarily limited to Articles 33, 65 and 70.
1
3. The US position is based on a narrow and incomplete analysis of the relevant provisions of
Canadian law and practice as well as of the relevant terms of the Agreement.
4. In reply Canada denies that there is merit in the US allegation and confirms that its patent law
and practice  respecting the term of protection accorded to Canadian patents issued on the basis of
patent applications filed before October 1, 1989 are consistent with the obligations imposed by the
TRIPS Agreement and more specifically are consistent and conform with the minimum standard
required by Article 33 as well as with the transitional or application rules set out in Articles 65 and 70of the Agreement.
5. It is Canada’s submission that the provisions of section 45 of the Act are consistent, and in
conformity, with the TRIPS Agreement and more specifically with the referenced Articles because:
(a) the term of the exclusive privilege and property right available under a “section 45”
patent is equivalent or superior to and consistent with the term of the exclusive
privilege and property right conferred by a patent where the term of protection
available does not, as required by Article 33, end before the expiration of a period of
twenty years counted from the filing date;
(b) in prescribing a term of protection that is measured from the date of the grant of a
patent, section 45 does not provide, or otherwise require, that the term of protection
conferred shall end before the expiration of the twenty year period measured from the
filing date of the patent application;
(c) the events or circumstances which may operate to limit the period of the term of
protection of a section 45 patent to less than twenty years measured from the filing
date are events or circumstances that are within the private decision making capacity
and strategic control of the applicant; and,
(d) in any event, “section 45" patents which were issued under an act of grant executed
before the application date of the TRIPS Agreement are exempt from 
the obligations
of the Agreement by virtue of the express exception set out in paragraph 1 of Article
70 and, more particularly, neither the retroactive application provisions of the
                                                     
1 Letter from Ambassador Rita D. Hayes of the US to Ambassador John M. Weekes of Canada; dated
May 6,1999.  Reproduced as Exhibit No. 1.WT/DS170/R
Page 68
Agreement set out in paragraph 2 of Article 70 nor the term of protection prescribed
in Article 33 have any application to such patents.
II. FACTS
A. TREATY PROVISIONS
6. Under the heading of “Term of Protection”  Article 33 of TRIPS provides that:
 The term of protection available shall not end before the expiration of a period of
twenty years counted from the filing date [of a patent application].
7. The scope of this obligation is further addressed in paragraphs 1 and 2 of Article 62. Those
two paragraphs stipulate that:
 1. Members may require, as a condition of the acquisition or maintenance of theintellectual 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.
 
 2. Where the acquisition of an intellectual property right is subject to the right
being granted or registered, Members shall ensure that the procedures for grant or
registration, subject to compliance with the substantive conditions for acquisition of
the right, permit the granting or registration of the right within a reasonable period of
time so as to avoid unwarranted curtailment of the period of protection.
8. Each Member’s obligation to implement the standards prescribed by the TRIPS Agreement
arises by virtue of both the provisions of paragraph 4 of Article XVI of the Agreement Establishing
the World Trade Organization (WTO) and the provisions of paragraph 1 of Article 1 of the TRIPS
Agreement.  In their material parts these two paragraphs provide, respectively, that:
 Each Member shall ensure the conformity of its laws, regulations and administrativeprocedures with its obligations as provided in the annexed Agreements.
 Members shall give effect to the provisions  of this Agreement...Members shall be free
to determine the appropriate method of implementing the provisions of this
Agreement within their own legal system and practice.2
9. As a substantive annex to the Agreement Establishing the WTO the TRIPS Agreemententered into force on January 1, 1995.  However, by virtue of its one year moratorium on the
obligation to implement, paragraph 1 of Article 65 delayed the “date of application” for the TRIPS
Agreement in Canada and other developed Member states until January 1, 1996.  Specificallyparagraph 1 of the Article provides that:
 Subject to the provisions of paragraphs 2, 3 and 4 [which are not relevant here], no
Member shall be obliged to apply the provisions of this Agreement before the expiry
of a general period of one year following the date of entry into force of the WTOAgreement.
                                                     
2 The Appellate Body endorsed the application of this rule respecting Member discretion in
implementing their TRIPS obligations in: India – Patent Protection For Pharmaceutical And Agricultural
Chemical Products (AB-1997-5), (WT/DS50/AB/R) (December 19, 1997) at paragraph 59 and following,
beginning at page 22.WT/DS170/R
Page 69
10. The obligations both to implement and to implement by a date certain are, despite their
positive expression, nevertheless subject to the caveats or special application rules which, under the
heading “Protection of Existing Subject Matter” , are set out in Article 70.
11. Most of these special application or transitional rules are narrowly or specifically focussed
and seek to address specific, anomalous or ambiguous circumstances that the treaty negotiators
expected to arise on the application date of the Agreement.
12. However the rules set out in paragraphs 1 and 2 of the Article are rules of general application.
The first, the paragraph 1 rule gives specific effe ct within the TRIPS context to the presumption of
international law3 as well as of the municipal law of many Member states against the retroactive
application of new law which would affect vested property or contractual rights subsisting on the
coming into force of the new law.
13. The rule against the retroactive application of its obligations is set out in the opening
paragraph of Article 70 and specifies that:
 This Agreement does not give rise to obligations in respect of acts which occurredbefore the date of application of the Agreement for the Member in question.
14. By its own terms, the second–or the paragraph 2–rule operates subject to the other provisions
of the Agreement.  In its material part it provides that:
 Except as otherwise provided for in this Agreement, this Agreement gives rise to
obligations in respect of all subject matter ex isting at the date of application of this
Agreement for the Member in question, and which is protected in that Member on thesaid date, or which meets or comes subsequently to meet the criteria for protection
under the terms of this Agreement.
B. T
ERM OF PROTECTION PROVISIONS IN CANADIAN PATENT LAW
15. Current Canadian patent legislation contains two provisions, which originally came into force
on October 1, 1989, that define the term of protection to be accorded to a successful applicant for
patent protection.
16. The two provisions are distinguishable on the basis of the filing date of a patent application,
by their references to different commencement dates for measuring the running of the term of
protection and by their specification of different lengths of the period for which protection will
continue after the happening of the commencement date.
17. Following their recent, essentially editorial, amendment by the Intellectual Property Law
Improvement Act 4 of 1993, the two provisions now specify that:
                                                     
3 The presumption has been codified in Article 28 of the  Vienna Convention on the Law of Treaties
which provides that:
Unless a different intention appears from the treaty or is otherwise established, its provisions do notbind a party in relation to any act or fact which t ook place or any situation which ceased to exist before
the date of the entry into force of the treaty with respect to that party.
4 S.C. 1993, ch. 15, s. 42.  Reproduced in relevant part as Exhibit No. 2.  These amendments came into
force on October 1, 1996.WT/DS170/R
Page 70
 44. Subject to section 46, 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 issuedunder 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.
18. Section 46 provides for the payment of annual fees–“maintenance fees”–to maintain the rights
accorded by the patent once granted.  It also provides that where such fees are not paid within the time
prescribed, the patent shall be deemed to have expired at the end of that prescribed time.  Specifically
section 46 states that:
 46.(1) A patentee of a patent issued by the Patent Office under this Act after thecoming 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.5
C. LEGISLATIVE CONTEXT AND HISTORY
19. The substance of sections 44 and 45 was, together with a large number of other proposed
amendments to the Patent Act , first introduced in Parliament on November 6, 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 November 17, 1987.
20. In Bill C-22 the provisions at issue were drafted to reflect their then prospective application.
Numbered as sections 46 and 47 within clause 16 of the Bill they provided that:
 46. Subject to section 48, the term limited for the duration of every patent issued
by the Patent Office under this Act the application for which patent was filed after the
coming into force of this section shall be twenty years from the date of the filing ofthe application in Canada.
 47. Subject to section 48, the term limited for the duration of every patent issued
by the Patent Office under this Act the application for which patent is filed on or after
August 1, 1935 and before the coming into force of this section shall be seventeenyears from the date on which the patent is issued.
7
21. Section 48 in Bill C-22 was equivalent to what, in the current version of the Act, is section 46.
But for some variation in the lapsing provision in subsection (2), section 48 is substantively identical
to section 46.
                                                     
5 S.C. 1993, ch. 15, s. 43.  Reproduced in Exhibit No. 2.
6 S.C. 1987, ch. 41, ss. 46, 47.  Reproduced in relevant part as Exhibit No. 3.
7 The reference to August 1, 1935 alludes to the effective date of the term of protection provision in the
prior version of the Patent Act  which, to harmonize the Canadian with the US term, had originally introduced
the ‘seventeen year from the date of grant’ term into Canadian patent law.  R.S.C. 1970, Ch. P-4.  Section 48introduced the seventeen year term.  Reproduced in part as Exhibit 4.WT/DS170/R
Page 71
 
 48.(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 by a patentee in respect of a period prescribed for thepurposes of subsection (1) are not paid before the expiration of that period, the term
limited for the duration of the patent shall be deemed to have lapsed on the expiration
of such further period as may be prescribed.
8
22. Two principal rationales underlay the introduction and enactment of Bill C-22.
23. The first involved the Canadian Governme nt’s resolve to respond to international
dissatisfaction with the open-ended nature of the provisions in Canadian patent legislation which
allowed for the compulsory licensing of patented inventions relating to the use, preparation or
production of foods and medicines.9  (Amongst other matters, the resulting amendments considerably
curtailed the period during which such compulsory licences were allowed to operate.10)
24. The second involved the Government’s decisions to ratify the Patent Cooperation Treaty , to
switch to a “first to file” from a “first to invent” system of patent protection and, more generally, to
modernize domestic patent laws, administrative procedures and practices.11, 12
25. While the desire to modernize the Canadian patent system was one, it was not the only,reason which lay behind the changes to the commencement date and length of the term of protection
provisions of the then contemporary patent legislation.  Another and important rationale for these
changes reflected “the desire to prevent patent applicants from manipulating the patent application
system by deliberately delaying the grant of their patent in order to delay the date of expiry...”.
13
26. In commenting on the effect of a “twenty year from filing” term in his book,  Intellectual
Property Law  Copyright  Patents  Trade Marks,  Professor David Vaver gives some comparative
perspective to this further rationale for change when he observes that:
 The present monopoly period [twenty years from filing] is effectively less than
twenty years. ... Before [1 October] 1989, patents lasted seventeen years from date of
grant, which could be long after the date of application because of delays in the PO[Patent Office].  Some delays were unavoidable.  Others were deliberately caused by
applicants intent on prolonging their monopoly.
14
                                                     
8 S.C. 1987, ch. 41, s. 48.  Reproduced in Exhibit No. 3.
9 See, for instance, David J. French.  “Patent Law Reform in Canada”, Canadian Intellectual Property
Review,  Vol.4, no. 2, 337.  Reproduced as Exhibit No. 5.
10 See: Exhibit No. 3, section 41.11 set out in clause 15.
11 Department of Consumer and Corporate Affairs, News Release , June 27, 1986.  Reproduced as
Exhibit No. 6.
12 Roger T. Hughes et al.  Hughes and Woodley On Patents , (Butterworths: Toronto, 1984), Loose leaf
service updated as of April 1999, pages 315 to 315-5.  Reproduced in relevant part as Exhibit No. 7.
13 Affidavit of Peter J. Davies, Chairman of the Patent Appeal Board of the Canadian Patent Office,
Paragraph 3.  Reproduced in its entirety as Exhi bit No. 8.  Hereafter cited as: Davies affidavit.
14 David Vaver, Intellectual Property Law–Copyright–Patents–Trade-marks , (Irwin Law; Concord
[Ontario], 1997)at page 114, footnote 2.  Reproduced in relevant part as Exhibit No. 9.WT/DS170/R
Page 72
27. The Bill C-22 amendments were introduced and published on November 6, 1986 and just
over a year later became law, as noted above, on November 17, 1987.  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 intelle ctual property community time to adjust to the new
system, most of the “modernizing” amendments, including the amendments relating to the term ofprotection, were not brought into force until Oc tober 1, 1989.  Thus both Government and affected
parties had three years notice of the change in regime in which to make transitional arrangements.
28. The reference in sections 44 and 45 to a threshold application date clearly 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.
29. In this circumstance Bill C-22 included an additional transitional provision that specified the
law that would apply to pre-threshold date applications.  The rule was set out in section 27 of the Bill
and provided that:
 27. Applications for patents filed before the coming into force of the provisionsof this Act referred to in subsection 31(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.
15
30. The law applicable to such applications is generally referred to as the “Old Act”.
D. THE PROSECUTION OF PATENT APPLICATIONS IN CANADA
31. In contrast to copyright and trade-mark property rights, which arise spontaneously upon either
the creation of the “work”, in the case of copyright, or the association in commerce of a mark with“wares”, in the case of trade-marks; patent rights do not arise until the State or its agent–in Canada,
the Commissioner of Patents or a patent examiner–is satisfied that the invention claimed meets the
statutory criteria of being new, inventive and useful.
32. Where satisfied that an invention is new, inventive and useful, the Commissioner will confirm
these qualities by granting and issuing “letters patent”
16 to the inventor (or its assignee).  The
Commissioner, through one of the examiners in the Patent Office, satisfies him or her self of thenovelty, creativity and utility of the claims in a patent application through a process of examination
and dialogue with the applicant.
17
E. OLD ACT APPLICATIONS
33. As a consequence of the transitional rule set out in section 27 of Bill C-22, section 45 or Old
Act applications continue to be evaluated on a “first to invent” basis and to be examined in
accordance with the other rules governing Old Act applications.18
                                                     
15 See: Exhibit No. 3, clause 27 of the Bill became section 27 when enacted as part of the amending
Act.
16 Peter D. Rosenberg.  Patent Law Fundamentals , (Second Edition), (Clark Boardman: New York,
1989), Vol. 5 at pages 1-5/6.  Reproduced in relevant part as Exhibit No. 10. And see: Harold G. Fox. Canadian
Patent Law and Practice, (Fourth Edition), (Carswell; Toronto, 1969) at  163.  Reproduced in part as Exhibit No.
11.  Roger T. Hughes.  Op. cit., at page 315.  David Vaver.  Op. cit., at page 113.
17 Davies affidavit, paragraph 8.
18 Davies affidavit, paragraphs 5 and 7.WT/DS170/R
Page 73
34. The Old Act application process, like the new, begins with the filing of an application for the
issuance of letters patent granting the applicant an exclusive privilege or property right in respect of
the invention claimed in the application.  Subject to the applicant withdrawing or abandoning an
application, the process culminates in the performance of one of two statutory acts.  Thus at the end of
the process the Commissioner will act to either: refuse the application and give notice of the refusal tothe applicant by registered letter (Old Act, section 40
19); or, under his or her signature and the seal of
the Patent Office, execute the grant of the patent (Old Act, section 4320).
35. The “dialogue” that occurs between the date of filing and the performance of either statutory
act of “grant” or “refusal” would typically begin where, after having “searched” the application–
meaning examining the claims against prior art litera ture and other matters affecting patentability, the
examiner issues a report to the applicant informing it of any deficiencies in the claims or scope of the
claims advanced in the application as well as of  any inconsistencies in the application with the
requirements of the Old Act orRules.21  Following the issuance of the examiner’s report the applicant
is accorded a six month period in which to respond to any issues raised by the examination.
36. The prosecution of an Old Act application and its period of pendency before the Patent Office
was, and continues to be, under the procedural control of the applicant.  Thus by controlling the speed
of the “dialogue” through the several means described in the quotation that follows, the applicant is
able to accelerate or, as Professor Vaver notes, retard the prosecution of its application according to
its own strategic interest in the timing and longevity of the protection it receives from the patenting
process.22
37. The principal means for controlling the pace of the “dialogue” and application process havebeen described by the Chairman of the Patent Appeal Board of the Canadian Patent Office.  The most
direct of these methods is for the applicant to simply approach the examiner and ask that the
examination be postponed to a later date.
23  The Chairman describes this and the other methods of
influencing the pace of the prosecution process as follows:
 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 beingrefused.
 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 toeach report issued by the examiner 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
                                                     
19 Patent Act, R.S.C. 1985, c. P.-4; c. 33 (3rd Supp.).  Reproduced in relevant part in Exhibit 12.
20 See: Exhibit 12, section 43.
21 Davies affidavit, paragraph 8.
22 Davies affidavit, paragraphs 3, 4 and 9.
23 Davies affidavit, subparagraph 10.i).WT/DS170/R
Page 74
the application will be treated 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 thatthe 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.
 
 In a similar manner an applicant can accelerate the prosecution of an old Act
application, for example, by making a request to advance an application for
examination out of its routine order and paying a fee; by asking the patent examiner
to speedup processing of the application;  or simply by responding immediately to
examiners’ reports or other requirements of the Office.24
38. Those who Professor Vaver has described as being “intent on prolonging their monopoly” byexploiting these various opportunities to delay the processing of an Old Act application, were able to
do so without prejudice to the security of their inventions.
39. The security of the invention was attributable to two features of the Old Act system. First, and
in contrast to “new Act” applications which become open to public inspection no later than eighteen
months after their filing dates
25, Old Act applications are only opened for public inspection once the
patent issues.  Second, under the Old Act “first to invent” system, disputes as to the entitlement to
patent protection are resolved through conflict proceedings26 which, on their conclusion, award the
patent right to the first to invent.
40. Thus, while the application is in the Patent Office and unless disclosed by the applicant, the
contents of the application, which is to say the invention, remain secret and protectable under the laws
of trade secrecy for the entire period during which the application is being prosecuted.  (Moreover,
where thought to be advantageous, the applicant could withdraw or abandon its application and
continue to rely on trade secrecy protection indefinitely because the Patent Office never discloses thecontents of an Old Act application which has been withdrawn, abandoned or refused.)
27
F. OLD ACT PATENTS  –  S TATISTICS
41. An examination of the records of the Canadian Patent Office relating to patents issued against
applications filed prior to October 1, 1989 and that still existed when TRIPS took effect in Canada28
reveals that a substantial number of Old Act applications had been prosecuted pursuant to a schedule
                                                     
24 Davies affidavit, paragraphs 10 and 11.
25 See: Exhibit 12, section 10 and S.C. 1993, c.15, s. 28.
26 These are “contested” proceedings within the Pa tent Office in which competing applicants for
patents respecting an invention file affidavit evidence to establish their respective “invention dates”.  Davies
affidavit, paragraphs 2 and 7.
27 Davies affidavit, paragraph 6.
28 For reasons related to application filing date data entry problems, the date used for the examination
was actually October 1, 1996.  However, given the number of patents issued in Canada on an annual basis, the
Patent Office is satisfied that the October 1 statistics are a reliable surrogate for the statistics that would havebeen applicable on January 1, 1996 had the data been available.  Davies affidavit, paragraphs 13 and 15.WT/DS170/R
Page 75
that, when viewed from the perspective of the application filing date, prolonged the duration of the
period of protection available to the applicant.
42. More particularly the records show that, as of the surrogate TRIPS application date, 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 are paid, expire until, or until well after, the expiry of the
twenty year period following their application dates.  In a very large number of these cases, the expiry
dates will be 2 to 5 years after the expiry of the twenty year period.
29
43. The obvious corollary of the foregoing is that , as of the surrogate TRIPS application date,
93,937 or just under 40 per cent of the Old Act patents then in existence had terms that will, assuming
the payment of annual maintenance fees, expire in less than the twenty year period measured from
their application dates. In 84 per cent of these cases, the patent will expire in the course of the
nineteenth year following the application date.  (In these “nineteenth” year expiry cases, 52 per cent
will expire in the last half of the year, while th e remaining 32 per cent will expire in the first half.)30
44. A supplementary examination of the records of the Patent Office, but one conducted in
relation to Old Act patents which will still be in force on January 1, 2000, reveals a foreseeably
similar result.  Thus of the 169,966 Old Act patents that will, 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, or until well after, the expiry of the twenty year period following their respective application
dates.31
45. Correlatively, 66,936 or just under 40 per cent of the Old Act patents still in force onJanuary 1, 2000 will, again subject to the payment of the annual maintenance fees, expire in less than
a twenty year period measured from their respective application dates.  In 77 per cent of these cases,
the patent will expire in the course of the ninete enth year following 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.)
32
G. NEW ACT APPLICATIONS
46. When Bill C-22 introduced the “first to file” system and redefined the commencement date of
the term of protection it eliminated an applicant’s capacity to delay the prosecution process so as to
extend the period during which it could enjoy protection.  In so doing it also effectively reversed anyincentive or licence to delay which had been inherent in the Old Act system.
47. The incentive to delay was reversed by the facts that the new term of protection ran from the
application filing date (section 44) and the application would become open to public inspection no
later than eighteen months after the date of filing (section 10) irrespective of whether the patent hadbeen “examined” and issued.  The incentive to delay was further diluted by the fact that an application
does not, under the New Act, enter the “exam ination” queue until the applicant requests
“examination” and pays the associated fees (section 35).  Originally the Bill C-22  Patent Rules
provided that this request had to be made within seven years of the application date.  The rule has
since been changed to reduce the period to five years (section 96).
33
                                                     
29 Davies affidavit, paragraphs 14 to 17.
30 Davies affidavit, paragraphs 14 to 17.
31 Davies affidavit, paragraphs 18 to 22.
32 Davies affidavit, paragraphs 18 to 22.
33 Davies affidavit, paragraph 26.WT/DS170/R
Page 76
48. The combined effect of these New Act rules is  that the measurement of the term limited for
the duration of the patent begins to run before the patent is issued so as to grant the applicant an
exclusive privilege and property right in the invention.  Accordingly, and in contrast to the Old Act
system, the period during which an applicant can expect to benefit from trade secrecy and enjoy theprivilege of exclusivity for the exploitation of its invention is being inexorably reduced throughout the
entire period during which the application for protection is being prosecuted and examined.
49. The changes introduced by Bill C-22 did, however, also preserve the capacity of an applicant
to exercise substantial control over the application prosecution process.  It did so by virtue of two of
its provisions.  First, it did so by giving the applicant the freedom to determine when, within a
specified period–first seven, now five years–after it had filed its application, it filed or would file itssubsequent “request for examination”.  Second, it preserved the capacity to control by preserving the
rule which, on the payment of a fee, allows an a pplicant to advance its position in the queue for
examination.
50. In addition to preserving measures which allowed applicants to exercise substantial control
over the prosecution process, Bill C-22 also introduced new rules relating to maintenance fees which,
in effect, gave successful applicants, whether under the Old Act or the New, control over the expiry
date of their patents.
51. The new rules respecting “maintenance fees” have this effect because they make the longevity
of the patent term of the exclusive privilege and property right accorded to a patentee for its invention
contingent upon the payment of annual fees which, when not paid within the prescribed time, result in
the deemed expiry of the patent.
H. N
EW ACT PATENTS  –  S TATISTICS
52. An examination of the records of the Canadian Patent Office relating to applications filed in
Canada on or after October 1, 1989 reveals that, as of November 1, 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 been twenty seven and one half months.
53. The same exercise, when focussed on patents that have actually issued against New Act
applications, reveals that 40,847 New Act patents have been granted by the Patent Office since the
coming into force date of the New Act (October 1, 1989).  The average pendency period, being 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 sixty months or five
years.34
54. The sixty 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”.  On average the delay between these two dates has, over the last ten years, beenapproximately fifteen months.  Subject to the applicant asking that its application 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
twenty four months.  The last component involves the time spent in “examination” itself.  Arithmetic
says that this period has averaged approximately twenty months.
35
                                                     
34 Davies affidavit, paragraph 29.
35 Davies affidavit, paragraph 29.WT/DS170/R
Page 77
55. Thus just as an Old Act applicant could, by its own conduct, control and prolong the duration
of its term of protection when measured from the application filing date where it so wished, under the
New Act an applicant can, by its own conduct, control and abbreviate  a substantial part of the period
by which the term of its exclusive privilege and property right will be reduced by the examinationprocess.
III. POINTS IN ISSUE
56. The issue in these proceedings is whether certain Canadian patents which:
(1) were issued against applications filed before October 1, 1989;
(2) existed on January 1, 1996; still exist: and
 
(3) have a term of protection that, when measured from their respective application filing
dates, will end before the expiration of a period of twenty years;
are consistent and in conformity with Canada’s obligations under the TRIPS Agreement.
IV. SUBMISSIONS
A. THE ROOT CAUSE OF THE MATTERS IN DISPUTE
57. The issue in dispute arises out of the fact that section 45 of the Canadian Patent Act  uses a
formula for specifying the term of protection to be  accorded to successful patent applicants which is
different from and, for the purposes of judging its compliance with TRIPS standards, cannot be
directly compared to or converted into, the formula for specifying the term employed in and
prescribed by Article 33 of the TRIPS Agreement.
58. The TRIPS formula specifies that: “The term of protection available shall not end before the
expiration of a period of twenty years counted from the filing date.”  Similarly section 44 of the
Canadian  Patent Act  prescribes that, for patents issued on or after October 1, 1989, “the term limited
for the duration of the patent is twenty years from the filing date.”.  If more definite than the TRIPS
formula, section 44 is easily assessed against and is clearly in conformity with the standard prescribed
by Article 33.  It gives rise to no issues in these proceedings.
59 The section 45 formula however makes no reference to the application filing date.  And that
fact lies at the heart of this dispute.
60. Instead of using the filing date as the commencement date of the term during which protection
shall be available, Section 45 provides that “the term limited for the duration of every patent
issued...on the basis of an application filed before October 1, 1989 is seventeen years from the date onwhich the patent issued.”.
61. The difficulty in comparing or converting the protection available under the section 45
formula with that available under the TRIPS formula arises out of the disjunction between the various
steps in the patent application process.
62. Typically, there are three discrete steps in the patenting process.  First, the applicant files its
application with a patent office authority.  Second, through a process of examination and dialogue
with the applicant, the patent authority satisfies itself as to whether or not the invention is new,WT/DS170/R
Page 78
inventive and useful.  Third, where the patent authority is satisfied that the invention is new, inventive
and useful, it grants the patent; where, alternatively, it is not so satisfied, it refuses to grant the patent.
63. It is obvious that in this sequence of events the date of application and the date of grant will
be separated in time.  Furthermore, because of the variability of the examination process, the temporaldistance between the two dates may be quite considerable.  As of November 1999, there were, for
example, about 1,000 patent applications which had been filed in Canada before October 1, 1989 and
against which no patent has yet issued.
36
64. As a result of the considerable variability of the temporal separation between the application
and granting dates, a patent bearing a face term of seventeen years from grant may, when measured
from its application filing date, have an “alternative” term of protection that is shorter than, equal to orlonger the than twenty year period referred to in Article 33.
65. The US contends that when the “alternative” term of a seventeen year from grant patent is
less than twenty years, a Member’s law that confers a seventeen year term from grant is not in
conformity with the Article 33 standard and the Member has an obligation to amend its law to extendthe term to a full twenty years from the application date so as to bring both the law and the patents at
issue into conformity with the TRIPS standard.
66. Canada disagrees.  It submits that there are good reasons for disputing, and denying, the
validity of both:
(a) the US proposition that the terms of protection of the patents here in issue are not
consistent with TRIPS; as well as
(b) the US proposition that the TRIPS Agreement requires that both the enabling law be
changed and that the terms of protection of the patents at issue be extended.
B. T
HE TERM OF EXCLUSIVITY PRIVILEGE UNDER SECTION 45 AND ARTICLE 33 IS EQUIVALENT
67. One of the reasons to deny the validity of the US propositions is that Article 33 does not stand
alone within the TRIPS Agreement but must be read in conjunction with the complementary term of
protection provisions in paragraph 2 of Article 62.
68. The latter provisions specify that the granting or registration procedures of Members shall not
operate so as to produce an “unwarranted curtailment” of the term of protection afforded to rights
holders.  Accordingly, Article 33 cannot be underst ood as intending to provide a minimum of twenty
full years of protection for the exclusive privilege and property rights which a patent confers.
69. In this light Article 33 is properly characterized as a substantive, not a merely technical, rule.
This emerges clearly from the conjoint reading of: the “ Desiring ” and paragraph (b) of the first
“Recognizing ” recitals which introduce the substance of the TRIPS Agreement and respectively read
 
...taking into account the need to promote effective and adequate protection of intellectual
property rights,
Recognizing ...the need for new rules and disciplines concerning...(b) the provision of
adequate standards and principles concerning the availability, scope and use of...intellectual
property rights;
                                                     
36 Davies affidavit, paragraph 23.WT/DS170/R
Page 79
with the “unwarranted curtailmen t” language of paragraph 2 of Article 62, which in its turn and
relevant part reads
Members shall ensure that the procedures for grant or registration, ..., permit the granting or
registration of the right within a reasonable period of time so as to avoid unwarranted
curtailment  of the period of protection.
70. Consequently when evaluating the conformity of a Member’s domestic law with its TRIPS
obligations under Article 33 it is necessary, not merely convenient, to scrutinize the substance,
“effectiveness” and “adequacy” of both the domestic law and the TRIPS obligation.
71. When the substantive, “effective” and “adequacy” content of section 45 and Article 33 is so
scrutinized, it is immediately apparent that the periods of protection extended to the holders of
exclusive rights under the two term of protection formulas are equivalent. And where one term is
substantively or “effectively” equivalent to, or as in the case of section 45, better than the other, the
two are by definition consistent with one another within the context of the reasonableness and
unwarranted curtailment standards articulated in paragraph 2 of Article 62.
72. Earlier analysis has demonstrated that, when measured from the application filing date, the
term of protection accorded to a section 45 patent is variable upwards from its face term of seventeen
years.  The variability is attributable to the fact that, at least in Canada, it normally took the patent
authority two to four years to complete the examination process.37
73. However while the “alternate” term of protection may vary according to the length of theexamination process, the seventeen year term dur ing which a successful applicant will enjoy the
exclusive privilege and property right conferred by a patent is constant  at seventeen years.
74. In systems such as the system contemplated by TRIPS where the term of protection is related
to the date of application rather than to the date of grant but where the exclusive privilege and
property right that flow from the patent run from  the date of grant, the period during which a
successful applicant will enjoy the exclusive privil ege and property right conferred by the patent is
not constant.  Consequently in practice that period will be variably  eroded by the time required to
complete the examination and granting process.
75. The fact that under the TRIPS formula the period of exclusivity will be eroded by the
granting process is recognized by paragraph 2 of Article 62 which, in seeking to impose a reasonable
limit on the degree of erosion, nevertheless sanctions the reduction in the exclusivity period when it
requires that:
...Members shall ensure that the procedures fo r grant or registration, subject to compliance
with the substantive conditions for acquisition of  the right, permit the granting or registration
of the right within a reasonable period of time so as to avoid unwarranted curtailment  of
the period of protection. (Emphasis added)
76. 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 is related to its
application filing date, the period of exclusivity will be reduced accordingly.
38  Since the five year
examination period is the normal or average examination period, it must, in Canada’s submission, be
                                                     
37 Davies affidavit, paragraph 8 and see as well the numbers of patents that have issued more than three
years after their application filing dates.
38 Davies affidavit, paragraph 29.WT/DS170/R
Page 80
viewed as being ‘a reasonable period which avoids any unwarranted curtailment of the period of
protection’.
77. In the result, where, as in the case of sec tion 44 patents, the term limited for the duration of
the patent is set at twenty years from its filing date, the period during which a successful applicantwill enjoy the exclusive privilege and property right conferred by a patent once issued will, in the
normal course, be fifteen years.  (It may, of course, provide either more or less protection depending
on the length of the examination process in any particular case.)
78. Thus where the section 45 class of term provision provides for a guaranteed seventeen year
term of substantive or “effective” protection for the exclusive rights conferred by a patent and the
other, the TRIPS, class of term provision provides a variable term of substantive or “effective”protection for those rights that is normally fifteen years, the two provisions can be said to be
substantively or “effectively” equivalent.
79. Canada submits that the two classes are, in both fact and practice, equivalent when measured
against any of the referenced standards.
80. In this respect it bares noting, that the substantive equivalence of the protection offered by the
two classes of term provision appears to have been accepted by the Parties to the North American
Free Trade Agreement (NAFTA) when they agreed to, and adopted, a term of protection provision
which provides that:
Each party shall provide a term of protection for patents of at least twenty years from the date
of filing or seventeen years from the date of grant.  A Party may extend the term of patent
protection, in appropriate cases, to compensate for delays caused by regulatory approval
processes.
39
81. Canada submits that where the constant period of substantive or “effective” protection for theexclusive rights conferred by a section 45 patent is equivalent to and in fact is routinely two years
longer than the normal or average, variable period of substantive or “effective” protection resulting
from the joint operation of Articles 33 and 62 of the TRIPS Agreement, the term of protection defined
by section 45 can be fairly said to be, and is, consistent with the minimum standard prescribed by
TRIPS.
82. Canada submits as well that since its two methods of determining the term of protection
provide equivalent periods of substantive or “effective” protection, in deciding to maintain the two
provisions in the course of implementing its TRIPS obligations, it acted within the scope of the
freedom afforded Members under paragraph 1 of Article 1 “...to determine the appropriate method ofimplementing the provisions of [the] Agreement within their own legal system and practice.”.
83. Canada further submits that the fact of the substantive or “effective” equivalency and
consistency of its law and practice, whether under section 44 or section 45, with the standard
articulated by Article 33 is, by itself , sufficient to dispose of the US complaint.
C. S
ECTION 45 D OES NOT NOW, NOR DID IT EVER, REQUIRE THAT THE TERM OF PROTECTION
END BEFORE THE EXPIRY OF A PERIOD OF TWENTY YEARS COUNTED FROM THE FILING DATE
84. A further reason to deny the validity of the US propositions is based upon the non-restrictive
nature of the term of protection prescribed by section 45 which in its material part provides that “the
                                                     
39 NAFTA, Article 1709, paragraph 12.  Reproduced as Exhibit No. 13.WT/DS170/R
Page 81
term limited for the duration of every patent issued...on the basis of an application filed before
October 1, 1989 is seventeen years from the date on which the patent is issued.”.
85. Section 45 makes no reference to the application filing date.  It therefore makes no
prescription as to when the term of protection it grants may end in relation to the filing date.  Moreparticularly, section 45 does not prescribe that the term of protection shall end before the expiration of
the twenty year period counted from the filing date.
86. The mere fact that section 45 does not specify that the term of protection shall not end before
the expiry of the period referred to in Article 33 neither means nor implies that the section, or its
substantive or “effective” content, is inconsistent  with the standard prescribed by TRIPS. The
Agreement neither proposes nor imposes specific forms or formula for fulfilling the substantive or“effective” obligations of Members.
87. Paragraph 1 of Article 1 confirms this where, in its last sentence it unambiguously states that:
“Members shall be free to determine the appropriate method of implementing the provisions of this
Agreement within their own legal system and  practice. ”  (Emphasis added).
88. There is therefore no obligation to implement or  respond to the provisions of the Agreement
according to any specific or predetermined formula.  Consequently it can only be the substance,
“effectiveness” or “adequacy” of a Member’s legal system and practice  that will be determinative of
questions of compliance or non-compliance with its obligations under the Treaty.
89. In the presence of this freedom to implement within a Member’s own legal system and
practice, the issue in this dispute can be reduced to whether or not section 45 makes a term of
protection which “shall not end before the expiration of a period of twenty years counted from the
filing date” universally available to successful applicants for patent protection.
90. The evidence of the practice relating to the administration of Old Act patent applications
makes it clear that a twenty year period measured from the application filing date was and continues
to be available to any applicant for a patent to which section 45 applies.
91. It is equally clear from the evidence drawn from the records of the Patent Office that as many
as forty per cent of Old Act applicants chose not to take advantage of the delays available within theapplication process to ensure themselves a term of protection that would not end before the expiration
of a period of twenty years counted from their application filing dates.
92. The obligation in Article 33 however only requires that the term be available. It does not
require that it be imposed contrary to the revealed preference or strategic choice of an applicant.
93. It is material here in discussing the availability of a ‘twenty year from filing’ term of
protection to make reference to the fact that, not only could and can an applicant, by its own conduct,
control and prolong the prosecution process to extend its term of protection but it could and can as
well, by its own conduct, truncate its substantive or “effective” term of protection at any time duringthe life of that protection, by simply refusing, or choosing not, to pay its annual maintenance fees.
94. It is similarly material to recognize that the provisions of domestic or municipal law that give
rise to this unilateral power to terminate a patent term before its statutory or, more significantly in the
context of these proceedings, its treaty, course has run, is a power that is recognized and condoned byparagraph 1 of Article 62 of the TRIPS Agreement. Thus, contrary to the apparent mechanistic nature
of the rule in Article 33 and of the assumption underlying the US allegation of non-conformity,
TRIPS contemplates that the substantive term of protection conferred on a patentee may, at theWT/DS170/R
Page 82
instance of the patentee, terminate at any time during the twenty year period counted from the filing
date.
95. This is so by virtue of paragraph 1 of Article 62 which stipulates that:
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 [which includes the
provisions relating to patents] compliance with reasonable procedures and formalities.  Such
procedures and formalities shall be consistent with the provisions of this Agreement.
96. Where a Member may adopt measures which impose conditions on the maintenance of the
substantive rights conferred by a patent, Article 33 cannot be said to establish an inflexible,mechanical formula for measuring the term of protection which imposes a minimum fixed term on the
longevity of the exclusive privileges and property rights conferred by a patent.  If it were otherwise
then Article 33 would contradict paragraph 1 of Article 62 and unwarrantably curtail the discretion
which that paragraph unambiguously extends to Members.
97. There are many reasons associated with the commercial or technological value of a patent
why a patentee might refuse, or choose not, to pay its annual maintenance fees and thus unilaterally
terminate the substantive or “effective” term of protection conferred on the patentee by virtue of either
an Old Act or a New Act patent before that term had run its course under either the prescription of the
TRIPS Agreement or the domestic law formula of protection.
98. Similarly, there are many reasons associated with the commercial or technological value of a
patent why an Old Act applicant might have preferred to have chosen, or seen a strategic advantage
for itself in choosing, to obtain the exclusive private property rights conferred by a patent as soon as
possible and in so doing, choosing also to forego the opportunity to obtain a term of protection that
would not end before the expiry of a twenty year period measured from its application filing date.
99. This is reflected in the fact that any applicant filing before October 1989 who prosecuted its
application without regard to the pace of the pro cess would have known that, at a minimum, it would
obtain full protection of its exclusive privilege and property right for the seventeen year period
running from the granting date.  And if they so purs ued their application, they did so knowing that if
they wished a longer term measured from their application filing date they could have acted to delaythe prosecution of their application to achieve that result.
100. However where an applicant has made those choices it cannot later be heard to complain of
its choices and seek to reverse them in order to obtain the windfall benefit of having its term of
protection retroactively extended.  As the United St ates Court of Appeal, Federal Circuit observed in a
case involving circumstances that are similar to those here in issue:
Abbott’s argument that it should not be bound by the earlier filing date because it received no
benefit from the divisional application is not persuasive.  The district court found that Abbott
chose to designate its patent as divisional in order to receive the potential benefits associatedwith the earlier filing date.  Abbott’s choice to do so cannot be disregarded simply because it
subsequently found that the later filing date would be more advantageous.  Abbott must
accept the consequences as well as the potential benefits of the divisional status of [its]
application.
40
                                                     
40 Abbott Laboratories v. Novopharm Limited and Geneva Pharmaceuticals,Inc. 104 F.3d 1305 (Fed.
Cir. 1997) at 1308.  The trial court expressed exactly the same view.  See: Abbott Laboratories v. Novopharm
Limited and Geneva Pharmaceuticals, Inc., 1996 WL 131498 (N.D. Ill) at *4.  Both reproduced as Exhibit
No. 14.WT/DS170/R
Page 83
101. So too here.
102. The evidence drawn from the records of the Patent Office further shows that just over sixty
per cent of all Old Act applicants saw and continue to see the benefit of taking advantage of theavailability of terms of protection that would not end before the expiration of the twenty year period
measured from their respective application filing dates.
103. The evidence of this fact becomes particularly revealing when, as appears in the bar chart
graphics annexed as Exhibit E to the Davies affidavit, the duration of the term of protection statistics
are organized in relation to the portfolios of Old Act patents relating to pharmaceutical inventions that
are held by a variety of individual corporate patentees.
104. The chart graphics use the TRIPS twenty year from filing date standard as their “ground zero”
or datum level and depict the negative and positive deviations from this standard in respect of each
Old Act patent in the several portfolios.  The chart graphics clearly demonstrate that the managers of
the various patent portfolios managed their respective application strategies in a manner that would, ina commanding majority of cases, provide terms of protection that were and are well in excess of the
minimum term prescribed by Article 33.
105. The evidence then shows that while a minority of Old Act applicants did not act to prolong
the length of the term of protection they woul d receive when measured from the filing date, the
majority did obtain terms of protection that equalled or considerably exceeded the minimum term
prescribed by TRIPS.
106. This comparative evidence of choice and predominance in respect of the length of patent
terms emerges more demonstrably from the statistics relating to the pharmaceutical patents held inindividual corporate portfolios.  In most of these instances, only the smallest minority of the patents in
the portfolio carried terms which, when viewed from their respective filing dates, would end before
the expiry of the twenty year period referred to in Article 33.
107. The US has not alleged and there is otherw ise no evidence that shows that any Old Act
applicant that sought a term of protection that was at least equal to a twenty year period measured
from its application filing date, was refused a term that met the minimum Article 33 standard.  All ofthe evidence is to the contrary.  In the words of the Chairman of the Patent Appeal Board:
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.
41
108. On the strength of this evidence, Canada submits that its Old Act or section 45 system madethe minimum twenty year from date of filing term of protection available both in law and in  practice
to every Old Act applicant.  And Canada did so without exception.
109. In the result, and given the factual availability in Canadian law and  practice  of the term of
protection referred to in Article 33, Canada reiterates its submission that, in deciding to maintain both
the section 44 and the section 45 methods for the specification of the term of protection in the course
of implementing its TRIPS obligations, it acted within the scope of the freedom afforded Members
under paragraph 1 of Article 1 “...to determine the appropriate method of implementing the provisions
of [the] Agreement within their own legal system and practice.”.
                                                     
41 Davies affidavit, subparagraph 10.i).  Mr. Davies tenure with the Canadian Patent Office exceeds 33
years (Davies affidavit, paragraph 1).WT/DS170/R
Page 84
110. In summary conclusion, here again Canada submits that the fact that the term of protection
referred to in Article 33 was available under the Canadian law and practice relating to section 45
patents is, by itself, sufficient to dispose of the US complaint.
D. ARTICLE 70
111. Canada has demonstrated that the substantive or “effective” term of protection accorded by
section 45 is equivalent or superior to and consistent with the substantive or “effective” term
contemplated by and available under the Article 33 obligation.  Canada has, as well, demonstrated
that under the law and practice relating to section 45 the term of protection contemplated by
Article 33 was available without exception to every Old Act applicant.
112. Canada further submits that, notwithstanding the substantive or “effective” equivalency with,
and the practical availability of, the term of pr otection contemplated by Article 33 under Canadian
law and practice, the Article 33 obligation does not apply retroactively to patents granted by the
Commissioner of Patents prior to January 1, 1996.
113. Old Act patents issued prior to January 1, 1996 were granted by the administrative act of the
Commissioner of Patents and are not subject to the obligations in the TRIPS Agreement by virtue of
the express language of paragraph 1 of Article 70 which, for ease of reference, is reproduced here in
its entirety:
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.
114. Read in the context of paragraph 1 the word “act” is not qualified as referring to any
particular type or class of act.  The only limitation contained in the paragraph is the temporal one
which restricts the application of the paragraph to acts which occur before the date of application ofthe Agreement for the Member in question.
115. In contrast to its use in paragraph 1 of Article 70, wherever the word “act” is used elsewhere
in the TRIPS text, its application and meaning is spec ifically limited or qualified by the context of its
use or modifying references which are associated with its use.
116. “Act” or “acts” is, for example, qualified in: Article 22.2(b) to refer to ‘acts of unfair
competition’; Articles 26.1, 28.1(a) and (b), 36, 41.1 and 70.4 to refer to acts of infringement,
potential infringement or unauthorized use; Article 37 and its heading to refer to acts not requiring the
authorization of the right holder; Article 50.7 to refer to acts or omissions of a right holder in relation
to provisional measures; and, in Article 58 to refer to acts of competent authorities in relation to the
execution of border measures.
117. It is obvious from this pattern of use that had the TRIPS negotiators intended to limit the
meaning of “acts” in paragraph 1 of Article 70 to a specific meaning such as “acts of infringement”
they would have done so, just as they did in Articles 26.1, 28.1(a) and (b), 36, 41.1 and 70.4.  That
they did not use such words of modification argues  that it was deliberate and they did not intend a
limited or qualified meaning.
118. There is, as the Chairman of the Negotiating Group on TRIPS notes in his forward to Daniel
Gervais’s book on the TRIPS Agreement
42, no authoritative negotiating history or formal record of
                                                     
42 Daniel Gervais, The TRIPS Agreement: Drafting History and Analysis , (Sweet & Maxwell: London,
1998).  Forward by Lars Arnell page vii at page viii.  See too the Preface by Gervais himself at page ix.
Reproduced in pertinent part as Exhibit No. 15.WT/DS170/R
Page 85
the TRIPS negotiation available to assist those involved in the application and interpretation of the
Agreement in determining the meaning or intended meaning of the Agreement.  Daniel Gervais’s
history and analysis, however, provides a useful substitute for a more formal record of the
deliberations of the negotiators.
119. In the passages of Dr. Gervais’s analysis commenting on Article 70 he explains the rule in
paragraph 1 of the Article in the following terms:
The first rule is simple: acts (including infringing acts) that occurred before the date of
application of the Agreement...to a Member do not give rise to obligations for the Member on
the territory of which those acts occurred.  This is non-retroactivity . ... There are no
exceptions to the first rule in Article 70.43  (Bold  emphasis in the original.  Bold, italicized
emphasis added.)
120. Thus both the textual evidence and expert commentary lead to the conclusion that the word
“acts” as used in paragraph 1 of Article 70 has a broader meaning than the US implies in its sparsely
expounded analysis.
121. The US relies solely on paragraph 2 of Article 70 to establish its allegation that Article 33
must be applied to Old Act patents which existed on the date of application of TRIPS for Canada.
Paragraph 2 of Article 70 provides, in material part, that:
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)
122. In its self-described “exceedingly simple” analysis of this case the US has failed to take any
account of the “Except as otherwise provided for in this Agreement” words which introduce
paragraph 2 of Article 70.  In ignoring these words, the US also fails to take any account of the rule in
paragraph 1 of Article 70 which Dr. Gervais has described as a “simple” rule respecting non-
retroactivity and from which he says “there are no exceptions.”.
123. In the India – Patent Protection  case, a case relied on by the US in its first written
submission, the Appellate Body, citing paragraph 2 of Article 19 of the WTO Understanding on
Rules and Procedures Governing th e Settlement of Disputes (1994)  (Understanding),44 noted in the
sentence immediately following the passage cited by the US, that in interpreting a treaty it is not
appropriate to read into a treaty words or concep ts that are not there, so as to lend meaning and
context to the Agreement.  In the words of the Appellate Body:
The duty of a treaty interpreter is to examine th e words of the treaty to determine the intention
of the parties.  This should be done in accordance with the principles of treaty interpretation
set out in Article 31 of the Vienna Convention .  But these principles of interpretation neither
                                                     
43 Gervais, 268.
44 Article 19, paragraph 2 provides that:
In accordance with paragraph 2 of Article 3, in their findings and recommendations, the panel
and Appellate Body cannot add to or diminish  the rights and obligations provided in the
covered agreements. (Emphasis added)WT/DS170/R
Page 86
require nor condone the imputation into the treaty of words that are not there or the
importation into a treaty of concepts that were not intended.45
124. The obvious corollary of this rule against the adding of words and concepts  to a treaty is
that ‘the principles of interpretation neither require nor condone the subtraction of words or
concepts from a treaty’ simply because it suits the interpreter’s purposes.
125. The idea that subtraction of words and concepts is no more acceptable than the idea of
addition of words and concepts, is an idea that is not simply applicable to the Panel and Appellate
Body jurisdiction to make recommendations as was the case where the Appellate Body made
reference to paragraph 2 of Article 19 of the Understanding in the India – Patent Protection  case.  It is
also an idea that operates, as a general rule of the Understanding, to discipline the Dispute SettlementBody itself.  This general rule is set out in paragraph 2 of Article 3 which provides that:
The dispute settlement system of the WTO is a central element in providing security and
predictability to the multilateral trading syst em.  The Members recognize that it serves to
preserve the rights and obligations of Members under the covered agreements, and to clarifythe existing provisions of those agreements in accordance with customary rules of
interpretation of public international law. Recommendations and rulings of the DSB cannot
add to or diminish the rights and obligat ions provided in the covered agreements.
(Emphasis added)
126. In the presence of these rules of construction Canada notes that on its plain language
paragraph 1 of Article 70 is a proviso ‘otherwise set out in the Agreement’ which trumps the selected
passage of the application provision upon which the US relies and which immediately follows both
the rule in paragraph 1 and the words of exception which introduce the provisions of paragraph 2 that
the US contends are applicable to this case.
127. Canada also notes that WTO jurisprudence is unequivocal in holding that the onus lies on the
complaining party to establish a prima facie  case of non-compliance.  In the United States – Woven
Wool Shirts  case the Appellate Body expressed this principle as follows:
...a party claiming a violation of a provision of the  WTO  Agreement  by another Member must
assert and prove its claim. ... India did so in this case.   And, with India having done so, theonus then shifted to the United States to bring forward evidence and argument to disprove the
claim.  This, the United States was not able to do...
46
128. Canada further notes that under Article 28 of the Vienna Convention on the Law of Treaties
(Convention) there is a codified presumption against the retroactive application of treaty obligationswhich applies “Unless a different intention appears from the treaty or is otherwise established....”.  In
its reliance on a selective portion of paragraph 2 of Article 70 the US has not shown any “different
intention”, nor has it “otherwise established” a contrary intention to the TRIPS codification of the
Convention rule against the retroactive application of treaty provisions to matters that pre-date its
coming into effect.
129. It is, therefore, Canada’s position that the US legal analysis supporting its allegation that the
obligation in Article 33 applies to section 45 patents does not establish a prima facie  case of non-
compliance.
                                                     
45 India – Patent Protection For Pharmaceutical And Agricultural Chemical Products (AB-1997-
5),(WT/DS50/AB/R) (December 19, 1997) at pages 17-18.
46 United States – Measures Affecting Imports of Woven Wool Shirts and Blouses from India ,
(WT/DS33/AB/R), (adopted: 23 May 1997) at pages 16-17.WT/DS170/R
Page 87
130. It does not do so because that analysis relies solely on a selected part  of paragraph 2 of
Article 70 and fails to take any account of either the opening subordinating phrase of that paragraph or
of the scope and application of the obviously related general rule against the retroactive application of
the Agreement set out in the immediately precedi ng provisions of paragraph 1 of Article 70.
E. CONCLUSION
131. In summary it is Canada’s position that:
(a) the substantive or “effective” term of protection available under section 45 of the
Patent Act  is equivalent or superior to and consistent with the substantive or
“effective” term of protection described by Articles 33 and 62 and does not thereforebreach any TRIPS obligation;
(b) the minimum term of protection descri bed by Article 33 is and has, without
exception, been available under the Canadian law and practice relating to section 45
patents; and,
(c) the US has failed to establish that Article 33 has retroactive application to patents
issued against applications filed prior to October 1, 1989 and granted by the
Commissioner of Patents prior to January 1, 1996.
V. DISPOSITION REQUESTED
132. Canada requests that the Panel established to examine this matter and to make such findings
as will assist the Dispute Settlement Body in making its recommendations or making its rulings in
respect of the conformity of section 45 of the Patent Act  with Canada’s treaty obligations, find that:
(a) the term of patent protection available under section 45 is equivalent or superior to
and is consistent and in conformity with the term of patent protection described by
Article 33;
(b) the minimum term of protection described by Article 33 is and has been available,
without exception, under the Canadian law and practice relating to section 45 patents;
(c) 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 January 1,
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.WT/DS170/R
Page 88
ATTACHMENT 2.2
ORAL STATEMENT OF CANADA AT THE FIRST MEETING
WITH THE PANEL
(20 December 1999)
I. INTRODUCTION
1. Mr. Chairman and members of the panel, my name is Ted Thompson and it is my privilege to
present Canada’s oral argument today.  With me  are my colleagues, Mr. Rob Sutherland-Brown and
Mr. Reagan Walker who may assist me in presenting Canada’s case.  The other members of theCanadian delegation are: Catherine Dickson and Mark Wigmore.
II. BACKGROUND
2. On January 1, 1995, Canada and the United States as founding Members of the WTO,
assumed important new treaty obligations.  Canada treats these obligations seriously.  Included are theobligations flowing from the Agreement on Trade Related Aspects of Intellectual Property Rights.  As
you know, its application date in respect to Canada was January 1, 1996.  TRIPS imposes a number of
new disciplines which are intended, among other things described in the recitals, to promote adequate
protection of intellectual property rights.  It also (in sub paragraph C of the recitals) recognised the
need to take into account differences in national legal systems.  Indeed, Art. 1.1 makes specificprovision for this.
3. TRIPS while concerned with protecting private intellectual property rights recognises that this
has to be achieved in a wider universe.  And so, we find in the statements of Objectives and Principles
set out in Arts. 7 and 8 that the protection and enforcement of these private rights must be achieved“in a manner conducive to social and economic welfare and to a balance of rights and obligations”
and as well permitting Members to formulate laws which “promote the public interest in sectors of
vital importance to their socio-economic and technological development provided the measures are
consistent with the provisions of this Agreement”.
4. In Canada’s view, these words are not idle platitudes; they are to be given force and meaning.
Interpreting an important Agreement such as TRIPS is not a mechanical exercise, rather it requires acareful examination of the rights actually intended to be protected and a balancing of those rights
within the context of the agreement’s explicit allowances for dissimilar legal systems and the broader
interests of society.
5. I know the panel will bear these overarching considerations in mind as it considers Canada’s
response to the U.S. complaint that Canada’s patent term protection measures are not fully compliant
with the obligation articulated in Art. 33.
6. In presenting its oral argument, Canada of course relies on its first written submission which
it is confident has been carefully read.  To the extent Canada makes references to legal authorities orother supplementary materials, in the course of its or al presentation, they will be suitably identified in
the written version of this presentation.
7. Canada will present argument on three issues.  The first two are independent stand-alone
arguments.  They present Canada’s position that the impugned measure, which we are calling forconvenience a “section 45 patent”, is compliant with TRIPS.WT/DS170/R
Page 89
8. First, Canada states the “period of protection” when properly construed afforded by a s.45
patent is equivalent or superior to the period of protection contemplated by Art. 33.
9. Second, Canada states a period of 20 years from filing in the terms of Art. 33 was “available”
to all applicants for s.45 patents without exception.  This availability is demonstrable and rooted to a
“sound legal basis” to use the standard approved by the Appellate Body in the India - Patent
Protection case.
10. Canada’s third and final argument is that the U.S. in alleging Canada’s term of patent
protection is non-compliant failed to establish a prima facie case that the obligation set out in Art. 33
has retroactive application to s.45 patents which exist as a result of acts which occurred before the
date of application of the Agreement to Canada.  Canada will also comment on the introduction of so
called “subsequent practice” evidence by the U.S.
11. With your permission, I will now turn to Canada’s first argument, which is elaborated, in our
first written submission at paragraphs 67 to 83.
III. ARGUMENT 1
12. In considering this argument, I would ask you to consider a basic question in respect of
Art. 33.  That is: What is “the term of protection”?
13. The answer to this question is fundamental to resolving the issue in dispute.  The U.S. would
have you accept that a period of protection that does not end before 20 years from filing - means a
patent is guaranteed 20 years of protection.  But this in Canada’s submission is clearly not the case.
The Agreement does not provide for 20 years of effective patent protection.
14. The very name of this dispute, Canada - Term of Patent Protection, suggests this conclusion.
The inviolate condition precedent to a term of protection under Art. 33 is a patent.  This obvious
statement has real meaning.  Understanding and applying it will have a direct result on the success of
Canada’s first argument.
15. Art. 33 is part of Section 5 of TRIPS which is entitled - Patents.  Art. 33 in turn is titled Term
of Protection.  The term of protection is therefore directly related to the existence of a patent.
16. A patent does not exist until it is issued.  That being said, it is evident that there is a period of
time between the date of filing and the issuance of a patent, which does not benefit from the Art. 33
“term of protection” because very simply, there is no patent to protect during that interregnum.
17. This period of time will vary depending on the particular circumstances.  It follows that a
“patent term of protection” as contemplated by Art. 33 is not as the U.S. argues a fixed minimum
period of 20 years, but a variable period of less than 20 years depending on the date of issue in
relation to the date of filing.  This fact was observed by Prof. Vaver as noted in paragraph 26 of
Canada’s first written submission.
18. The negotiators were also aware of this result as is plain from Art. 62.2 which suggests
process time should be completed in a reasonable time - “so as to avoid unwarranted curtailment of
the period of protection”.
19. It is clear from the plain language of Art. 62.2 that the period of protection is known and
accepted to be curtailed by the procedures necessary for grant or registration.  The term of protection
must a fortiori  be a variable period of less than 20 years measured from the filing date.  In
commenting on Art. 62.2, Dr. Gervais writes in his book at page 239, “Curtailment could also refer toWT/DS170/R
Page 90
a general diminution of the value of the protection, however, and thus include delaying in an
unwarranted (“unjustifiable”) fashion the beginning of the period of protection which may affect the
right holder very negatively indeed”.
20. How does this variable period inscribed in Art. 33 compare with the definite period of 17
years guaranteed by s.45?
21. The Chairman of Canada’s Patent Appeal Board has said in paragraph 29 of his affidavit
(Exhibit 8) that in Canada the normal or average period to process a “new Act” or s.44 patent
application is 60 months or 5 years. This leaves an average period of 15 years for the term of
protection contemplated by Art. 33, which will vary, up or down depending on circumstances.  (Here
refer to Exhibit F to Davies Affidavit)
22. Under the old Act regime, there is a minimum 17 year term of protection, which follows
whatever the process time is from the date of filing.  The old Act term of protection is clearly
equivalent.  A guaranteed period of protection of 17 years measured against a variable term ranging
up or down from 15 years depending on circumstances is in fact superior to the TRIPS standard.
23. It is important to recall that the ability to control the process period is very much in the hands
of the applicant.  I will describe this in more detail in a moment in presenting Canada’s 2nd argument.
However, as noted in paragraph 80 of Canada’s first written submission, the U.S. appears to have
recognised the equivalency of the two terms as one of the parties to NAFTA.  In Art. 1709.12 ofNAFTA, the parties have approved two separate terms as acceptable; namely 20 years from filing or
disjunctively 17 years from grant.  Either te rm is acceptable, to the U.S. under NAFTA.
24. In paragraph 81 of its first written submission, Canada summarizes its argument on this issue.
It notes that the term of real or effective protection under the 20 years from filing formula is variabledepending on the process time.  Accordingly, it does not lend itself to a simple arithmetic or
mechanical application with an axiomatic result as suggested by the U.S. in paragraph 3 of its first
written submission.
25. The U.S. argues that thousands of U.S. patentees have suffered harm as a result of time
deficient 17 year patents (see for example paragraphs 4,5,6 of its first written submission).  Canada
says that this allegation is without foundation.
26. Again, under the s.44 patent regime, Canada has demonstrated that in Canada the average or
normal period of effective protection is 15 years, that is 20 years from filing less processing time,
whereas s.45 patents have a fixed 17 year patent term.  The U.S. argument holds that a s.45 patent
holder who chose to have his patent issue in less than three years from filing is entitled as of right to acommercial windfall, because of a subsequent configuration of patent term protection it wants applied
retroactively.  Notwithstanding, the period of effective protection is two years longer than the normal
period to be expected under the new system, the applicant is entitled to even more protection because
the process time, a period that is offered no protection under Art. 33, presents an arithmetical
advantage.  Canada, as I understand the U.S. position, must now give effect to some notional orartificial advantage that confers no real benefit under the new system and disavows the original
bargain with society without conferring any balancing benefits.
27. This, with respect, is inconsistent with the stated objects and principles of the Agreement.  It
is to require that someone who is receiving substantively more under the old system than normallyavailable under the new, be given yet more.  To what end? So that Pfizer to use the U.S. example can
extend its term of exclusivity for 14 months and enjoy windfall sales.  Someone has to pay and the
additional costs will be imposed on the Canadian consumer.  Competitive manufacturers who have
made plans and investments based on one system of  laws will have to be told we retroactively
changed the rules.  This can only result in marketplace disruptions even if compensation is paid.  ThisWT/DS170/R
Page 91
will not promote competition, trade, innovation, so cio-economic development or the transfer and
dissemination of technology.  You will search in  vain for such benefits flowing from the U.S.
position.
28. Such a result can only flow from a narrow and selective reading of the agreement and does
not achieve protection in the language of TRIPS Art. 7, “ in a manner conducive to social and
economic welfare and to a balance of rights and obligations”.
29. Giving support to such a mechanical application of Art. 33 will serve the ends of windfall
profits and undermine the broader principles of the WTO to “promote the public interest”.  No
reasonable expectations or legitimate interests of patent holders will be prejudiced by accepting and
recognising the equivalency of these two systems.  A s.45 patent holder has 17 years of full effectiveprotection.  There are no accrued rights associated with these patents that would be adversely affected
by refusing to adopt the gratuitous windfall position advanced by the U.S.  Giving effect to the U.S.
position will disrupt commercial investment a nd visit increased costs on Canadian consumers.
IV. ARGUMENT 2
30. Canada’s second argument supplies an independent reason for denying the U.S. complaint.
(It is detailed in paragraphs 84 to 110 of Canada first written submission)  It is also complementary of
its first argument.
31. Like the first argument, it arises from a plain reading of the language of Art. 33.32. Art. 33 states simply “the term of protection available” shall not end ...etc.33. Available means something capable of being used, at hand or obtainable.  S.45 is of course
silent about a filing date although that is what starts  the process to obtain a patent.  Is or was 20 years
from filing available under the old Act system?  Peter Davies the Chairman of Canada’s Patent
Appeal Board and a man of 33 years experience in the field says it was and that it was available
without exception.
34. In his affidavit (Exhibit 8) at paragraph 10(i) he says an applicant can achieve a process delay
simply by asking.  He is unaware of a delay ever being refused.  The time was there for the asking.
35. Neither s.45 nor any other law or requirement of Canada purports to limit or restrict the
period of protection available to less than 20 years from filing.  As a matter of Canadian law and
practice it is available for the asking.  It may be argued perhaps that applicants couldn’t make
informed choices because it wasn’t an issue before 1986 when Canada tabled Bill C-22.  What is true
on all the evidence is that if somebody wanted to delay the issuance of their grant, they could.  Thetime was there for the asking in almost unlimited amounts if you consider the more than 1000 s.45
patent applications, which are still pending.
36. The Appellate Body in India - Patent Protection had the opportunity to consider what standard
a member must meet under Art. 1.1 of TRIPS.  By way of reminder Mr. Chairman, you will recall thats.5 of India’s Patent Act prohibited issuing patents for certain pharmaceutical and agricultural
chemical products.  India, relying on the Art. 1.1 freedom to determine the appropriate method of
implementing the provisions of the Agreement within its own legal system and practice purported to
meet the obligations of Art. 70.8 of TRIPS by issuing “administrative instructions” by which
applications for patents in respect of the prohibited products could be filed with filing dates assignedto them.WT/DS170/R
Page 92
37. At paragraph 59 of its report, the Appellate Body affirmed a Member could rely on Art. 1.1 in
meeting its obligations but concluded at paragraphs 70 and 71 of the report that India’s administrative
instructions did not provide a sound legal basis for preserving the novelty of inventions and priority of
applications as of the relevant filing dates and accordingly the measure was inconsistent with
Art. 70.8(a) of TRIPS.
38. Earlier in its reasons, the Appellate Body at paragraphs 56 and 57 affirmed the legal test
established in the Panel report under appeal namely that “means” employed to meet an obligation
under TRIPS must provide a “sound legal basis” to protect or preserve the right or interest in question.
39. The obligation set out in Art. 33 is to make available a term of protection that does not end
before 20 years measured from the filing date.  As I will explain in a moment, it is Canada’s positionthat it has provided a legal mechanism in its laws through which an applicant can obtain 20 years
from filing.  And therefore Canada has provided a “sound legal basis” for such a term of protection.
40. S.45 patent term protection is not described in language that is similar to the language
employed in Art. 33.  S.45, unlike India’s Patent Act, does not purport to prohibit or limit a benefitavailable under TRIPS.
41. The evidence of Mr. Davies (Exhibit 8) is unequivocal that the 20 years from filing date was
available and he describes how patent applicants could exercise control over the pendency period
between filing and grant in paragraphs 9, 10 and 11 of his affidavit.
42. It is clear that the obligation under Art. 33 is to make the period available.  It does not require
a member to impose that period against the revealed preference of the applicant.  Under the Patent Act
and its accompanying rules, the applicant could exercise control.  The applicant could do so
informally, simply by asking, or alternatively the applicant could take advantage of statutorilymandated delays for perfecting applications and other essential procedural steps.
43. Consistent with the analysis in the India-Patent Protection dispute Canada submits that the
time periods established by statute for an applicant to prosecute its application provides the “means”
by which Canada makes the term of protection available and the fact they are statutory rights
establishes the “sound legal basis”.  Under Canada’s Patent Act, unlike the administrative instructions
to India’s officials, Canadian officials are not required to ignore statutory provisions, but to give effectto them.  Under s.30 (1) of the old Act, which is being distributed to you now, there are two time
frames established for completing certain acts under penalty of an application being deemed
abandoned, the first is 12 months to complete an application after filing and the second is 6 months to
prosecute the application after notice that an examiner has taken action.  Under s.30 (2), an applicant
is provided a period of 12 months to apply to have an abandoned application reinstated.  When eachof these process delays are added, together, that is; 12 months to complete the application plus where
one fails to do so a further 12 months to have it reinstated plus 6 months to prosecute the application
plus, where one fails to so prosecute, a further 12 months for re-instatement, it can be seen that s.30
alone permits delays of 42 months or 3.5 years available to any applicant who chooses to take
advantage of the provisions.  (Canada Exhibit 16)
44. A second statutory delay is found in s.73 of the old Act.  That section provides a period of up
to 6 months to pay the prescribed fees in a notice of allowance on penalty of forfeiture.  A forfeited
application may be restored within 6 months from incurrence on payment of the prescribed fees.  This
makes a further year of delay available from the filing date.  When one adds the delays from filingavailable under s.30 and s.73 to the 17 year patent term protection from grant, the total amounts to a
statutorily available term of 21.5 years from date of filing.  Of course none of these delays take
account of the time required for a patent examiner to complete an examination or the potential for
multiple additional delays to provide requested information to an examiner during that process.WT/DS170/R
Page 93
45. There is a difference between the delays provided in s.30 and s.73 of the old Patent Act.
Under the latter section reinstatement is automatic  on payment of the prescribed fees; however, under
s.30 (2) the applicant must satisfy the Commissioner the reason for the delay was not reasonably
avoidable.  This discretion not to allow reinstatement does not undermine the “sound legal basis” of
the statutory scheme for several reasons.
46. First, as we have noted in Canada’s first written submission at paragraph 95, pursuant to Art.
62.1 of TRIPS, Members may require compliance with reasonable procedures to maintain intellectual
property rights.  That is exactly what the discretion in s.30 (2) provides.
47. Second, as Mr. Davies affidavit (Exhibit 8) affirms at paragraph 10(iii) an abandoned
application can be reinstated.  A search of Canadian jurisprudence reveals there has never been achallenge based on reinstatement being disallowed under s.30 (2) of the old Act.  Mr. Davies has
sworn he is unaware of any delay being refused.  Finally, the consequence of a refusal if there ever
was one is only that the process would have to be recommenced with a new application.  This results
in further delay, which is presumably what the applicant desired.
48. In light of the continued secrecy protection and the “first to invent” regime for resolving
conflicting claims the applicant/inventor’s rights are at no risk.  You will recall that under the old Act,
trade secrets are protected indefinitely until a patent is issued; and that conflicting claims are resolved
in favour of the first to invent.
49. Accordingly, under the old Act regime, a bona fide inventor was at no risk during the period
his application for patent was pending or abandoned.  Applicants were vested with the right to
expedite, delay or let the process proceed at its natural pace.  These rights, being those of the
applicant, were exercised according to their interest and not the Canadian government.  Indeed, Mr.
Davies at paragraph 23 of his affidavit has identified approximately 1000 old Act applications that arestill pending.
50. The U.S. complaint, while it embraces all patent subject matter is driven by elements of the
pharmaceutical industry.  The U.S. admits as much in its first written submission at paragraphs 5 and
6 by using Pfizer Inc. as an example.  Pfizer sued Canada unsuccessfully, earlier this year, in an
attempt to have its “Zoloft” patent extended.  Bristol-Myers Squibb has orchestrated media campaigns
encouraging other s.45 patent holders to demand the type of extensions that the U.S. alleges arerequired by TRIPS.  To date, none have been forthcoming.
51. If we examine the s.45 patent portfolios of some major drug manufacturers, the availability of
terms as long or longer than twenty years from filing is manifest.  Mr. Davies has appended graphic
depictions of this as Exhibit E to his affidavit.  I will not take you through all of them but have chosenthree as illustrative, Pfizer Canada Inc., Bristol-Myers Squibb and Merck Frosst Canada (Exhibit E at
page 10, 4 and 8 respectively).  The graphs show the term of protection for the portfolio of s.45
patents in relation to 20 years from filing which equals 0.  (Here use overhead depiction and describe)
52. Although the right to extend s.45 patents beyond 20 years from filing has not always been
exercised, it is plainly apparent that it is obtainable or available if desired.
53. The U.S. has also led evidence in addition to Zoloft of ten other non-pharmaceutical s.45
patents, which according to their argument are term deficient.  The ten selected patents were issued on
December 28, 1998.  There were in fact 500 s.45 patents issued on that date; 77% had terms greaterthan 20 years from filing which in Canada’s subm ission is further confirmatory evidence of the
availability of such a term.  (Canada Exhibit 17)WT/DS170/R
Page 94
54. It is unambiguously the case that an applicant relying solely on statutorily mandated delays
can arrange its affairs so as to obtain 20 years of protection from the filing date under the old Act
regime.  Those that did not received the right to their exclusive patents early and can exploit them for
a full 17 years.  As in the Abbott case referred to in paragraph 100 of Canada’s first written
submission, those who made that choice must accept both the benefits and the consequences.  Pfizer,
for example, through the U.S. complaint is asking the WTO to give it the full benefit of both regimes
even though it had no legitimate right to both terms when it decided to have its patent issue.
55. Before turning to Canada’s final argument, it is useful to consider the underlying purpose of
Art. 33.  Dr. Gervais at page 169 of his book, indicates the goal was to achieve harmonization of the
term of protection among member states.  Canada has provided the twenty year from filing
formulation since 1989.  Dr. Gervais al so made the following observation:
“During the negotiation, attempts were made to extend protection for certain products the
marketing of which is often delayed by regulatory approval processes, notably
pharmaceuticals.  No such provision is included in the final version”.
56. Statutory mandated delays aside, the complexity of the approval process alone caused such
delays that consideration to extending the 20 year term was debated and given some recognition in
Art. 62.2.
57. It is apparent that for the pharmaceutical co mpanies who are driving this complaint it may
well have required extra effort to expedite their s.45 applications in order to avoid a delayed term of
protection which would not st art before three years after the date of filing.
V. ARGUMENT 3, ART. 70 - (PARAGRAPHS 111 TO 130 CANADA’S FIRST
WRITTEN SUBMISSION)
58. In order to found a complaint of non compliance, the U.S. must at a minimum establish a
prima facie case that Art. 33 has application to s.45 patents.  In Canada’s submission, the U.S. has
failed this threshold standard.
59. Art. 28 of the Vienna Convention is directly relevant here.  It raises a presumption against the
retroactive application of treaties in relation to any act or fact or situation, which ceased to exist
before the date a treaty, comes into force.  “Unless a different intention appears from the treaty or isotherwise established”.  Because of their obvious potential to negatively impact on accrued rights and
interests, Canada submits that retroactive provisions, where there is any doubt as to their scope or
meaning, should be construed narrowly.
60. To meet this challenge to demonstrate a treaty obligation has retroactive application, the U.S.
has chosen to rely on a selective passage in Art. 70.2 without reference to is context.  That is just not
good enough.
61. Canada readily concedes that presenting a coherent, consistent and complete interpretative
rationale for Art. 70 and each of its paragraphs is a daunting task.  In light of Canada’s first twoarguments, it is a task this panel may not have to undertake.  But that does not relieve the U.S. of its
evidential burden.
62. As the Appellate Body wrote in Brazil-Desiccated Coconut:
“Absent a contrary intention, a treaty cannot apply to acts or facts which took place, or
situations which ceased to exist, before the date of entry into force”.  (Brazil-Measures
Affecting Desiccated Coconut WT/DS2 2/AB/R, 21 February 1997 at page 15)WT/DS170/R
Page 95
63. The legal analysis in U.S. first written submission does not even attempt to address the clear
affirmation of Art. 28 of the Vienna Convention expressed in Art. 70.1.  In fact, it does not
acknowledge the paragraph in any way.
64. Art. 70.1 is brief and bears repeating in its complete text:
“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”.
65. In Canada’s submission, it is for the U.S. to demonstrate that this clear and unambiguous
language has no application to s.45 patents issued before January 1, 1996.  Canada notes that the act
of filing an application is necessary to trigger the time period in Art. 33 and the administrative act ofissuing a patent is necessary to trigger the term of patent protection that may occur in the course of
that time period.
66. In paragraph 11 of its first submission, the U. S. without explanation, discussion or analysis
equates patents with “subject matter”.  Let us consider Art 70.2 for a moment;  it commences with thefollowing words:
“Except as otherwise provided for in this Agr eement, this Agreement gives rise to obligations
in respect of all subject matter existing at the date of application of this Agreement”.
67. In TRIPS as is clear from the sub-heading of Art. 27 patents are not subject matter.  Some
subject matter is patentable; that is capable of being patented but the patent itself is not subject matter.
A patent is a grant of an exclusive right for a specific period of time by a government, it is not the
subject matter of that grant.  The expression “subject matter” clearly refers to matter that is
protectable by intellectual property rights and not the vehicle through which they are protected.
68. The U.S. theory of Art. 33 applying to s.45 patents is therefore both incomplete and
misconstrued.
69. There is one further argument advanced by the U.S. that Canada will address at this time.
Argument on Subsequent Practice
70. In the U.S. first written submission at paragraph 15, it is alleged that the subsequent practice
of certain WTO Members has established the general agreement of all Members with the American
interpretation of TRIPS, Arts. 33 and 70.
71. Canada submits that subsequent practice is a rule of evidence and not a canon of
interpretation.  As Lord McNair has described, it:
...subsequent practice of the parties is not so much a principle of interpretation as a rule of
evidence.  “It is a question of the probative value of the practice of the parties as indicative of
what the treaty means.”1
72. It is necessary to examine the U.S. evidence in order to see what it proves.  In Canada’ssubmission, that evidence falls well short of establishing the agreement of all WTO Members with the
American interpretation.  For such an agreement to be established, evidence of a common
                                                     
1 Lord McNair.  The Law of Treaties .  Oxford (Clarendon Press:1961), p. 427WT/DS170/R
Page 96
understanding as to the application of these provisions in the same, or at least, similar, circumstances,
would be required.  The rule is described in the Encyclopaedia of Public International Law Vol. 2 at
page 1421 in these words:
“Subsequent practice must be more or less uniform and accepted by the parties in order to
furnish a valid means of treaty interpretation.”
73. In paragraph 17 of its first written submission the U.S. lists five WTO Members who
allegedly amended their laws to comply with the mentioned TRIPS provisions in the same way as the
US did: Australia, Germany, Greece, New Zealand and Portugal.  But the circumstances in these
Members was not the same, or even similar, to Canada’s disputed measure.
74. Each of the first three countries mentioned had, prior to TRIPS, a term from filing system.
Because that system fell short of 20 years protection, – 15 years from filing for Greece; 16 years from
filing for Australia, and 18 years from filing for Germany; each of these was deficient in terms of the
20 years from filing obligation of TRIPS, Art. 33.  Apparently uniquely, New Zealand established
that;  “S.30 (3) The term of every patent shall be 20 years from the date of the patent” (U.S. firstsubmission Exhibit 9 page 59).
75. Canada’s term from filing system was already at the level of 20 years of protection at the time
the TRIPS Agreement took effect and had been at that same level ever since the relevant provisions of
Bill C-22 came into force, i.e. on 1 October 1989.  This fact is not in issue in this dispute.
76. The U.S. offers no evidence of the existence of a subsequent practice establishing an agreed
application of the Agreement to term-from-grant patents.
77. The only WTO Member having a term-from-grant system, that is mentioned by the U.S. as
agreeing with the American interpretation, is Portugal .  However, it is obvious that Portugal did not
amend its legislation of its own volition.
78. Whereas the other WTO Members mentioned by the U.S. all passed legislation in 1994 or
1995, in anticipation of their TRIPS obligations.  Port ugal did not do so until much later.  And this
was only because the U.S. initiated a WTO Panel proceeding against them.  When a country amends
its legislation and applies a provision of a treaty in order to resolve a trade dispute, it is not
necessarily evidence of a common understanding of the meaning of the provision.  Indeed, it is only
the exceptional case that is settled solely on the basis that one party has decided the other was right in
its position.  (Canada notes, with some curiosity, th at the U.S. initiated its complaint against Portugal
in 1996 but has waited until 1999 to commence a similar complaint against Canada).
79. The reality is that the U.S. is alone in its interpretation of how Arts. 33 and 70 apply to term-
from-grant systems.  It is also the case that the U.S. has no evidence to demonstrate its legal system
and practice or any of the Members it identifies are in any way similar to Canada’s.  The international
law commentators and the WTO Appellate Body alike are agreed that a unilateral interpretation by
one of the parties to a treaty does not establish a subsequent practice so as to be binding on otherparties.  The Appellate Body in Japan-Taxes on Alcoholic Beverages put it in the following terms:
“...the essence of subsequent practice in interpreting a treaty has been recognized as a
‘concordant, common and consistent’ sequence of acts or pronouncements which is sufficient
to establish a discernible pattern implying the agreement of the parties regarding itsinterpretation.  An isolated act is generally not sufficient to establish subsequent
practice...  (emphasis added)”
80. Canada submits that the U.S. has submitted no subsequent practice evidence capable of
assisting the Panel in interpreting the relevant provisions of the TRIPS Agreement.WT/DS170/R
Page 97
VI. CONCLUSION
81. In summary, Canada asserts that the U.S. has failed to meet the evidentiary burden to
establish that Art. 33 has application to Canada’s s.45 patent regime.  Even assuming Art. 33 is
applicable, a term of protection as described in that paragraph has always been available under both ofCanada’s patent regimes.  As well, the guaranteed term of protection of 17 years from grant
prescribed by s.45 is equivalent to the variable term of effective protection which arises under the
Art. 33 formulation.
82. That concludes Canada’s first oral submission and we appreciate the close attention you have
given our remarks.WT/DS170/R
Page 98
ATTACHMENT 2.3
RESPONSES OF CANADA TO WRITTEN QUESTIONS FROM THE PANEL –
FIRST MEETING
(7 January 2000)
I. REPLIES OF CANADA TO QUESTIONS FROM THE PANEL ADDRESSED TO
BOTH PARTIES
Q.1 *Article 62.2 provides that Members are to ensure that the procedures for granting
intellectual property rights allow granting of the right "within a reasonable period of time so as
to avoid unwarranted curtailment" of the protection period.
(a) What would constitute an "unwarranted curtailment" of a patent protection
term?
In answering this and associated questions Canada believes that it is critical to bear in mind
that Article 62 of TRIPS is specifically concerned with giving the treaty's sanction to the erosion of
nominal terms of protection which occur where the term begins on the application filing date but the
intellectual property right at issue is subject to reasonable pre-registration or pre-granting procedures
that have the effect of curtailing the actual length  of the term of protection accorded to the rights
holder.
The Article is therefore relevant to the term of protection accorded to patents governed by
section 44 of the Canadian Patent Act  (Act) but not to patents governed by section 45 of the Act.  The
United States of America (US), the complaining party in this dispute, has neither challenged norotherwise put in issue, any attribute of section 44 patents or the system by which they are granted.
With these considerations in mind Canada would begin its answer to this specific question by
observing that "unwarranted" means "unauthorized, unjustified" and that "curtailment" means "cut
short, deprive of".
1  Taken together in the phrase "unwarranted curtailment", the two words would
therefore mean: An unauthorized or unjustified cutting short of something, in this case, the period of
protection associated with a patent.  The phrase expresses an ordinal concept which, like theanalogous ordinal concepts of "unreasonableness" and "undueness", must take its meaning from the
facts and circumstances that are relevant in the context of its use.  In other words "unwarranted
curtailment" is a question of fact to be determined in the particular circumstances in which the
curtailment occurs.
Thus to know what may constitute "unwarranted  curtailment" treaty interpreters must, in the
context of the "reasonable procedures and formalities that Members may require as prerequisites" for
the application, approval, granting and maintenance of patents, examine the procedures and
formalities in issue and decide: whether they are "authorized", in the current context, by statutory or
regulatory provisions of a Member or, where they flow from administrative practices and rules,whether they are justified by the nature and purpose of the application-approval and granting
processes.
                                                     
1 The Concise Oxford Dictionary of Current Englis h, Seventh Edition, (Oxford: The Claredon Press,
1982) .WT/DS170/R
Page 99
In this regard treaty interpreters will need to take into account the function of the procedures
at issue, the resources available to perform those functions, reasonable administrative response times
to fulfill those functions, variations in demand for the applicable administrative services, the conduct
and degrees of freedom given to an applicant in the prosecution of its application as well as the level
of user satisfaction with the patent granting system.
It is Canada's view that in drafting paragraphs 1 and 2 of Article 62 the TRIPS negotiators
understood that the patent application and examination process is a variable exercise that will depend
on the simplicity or complexity of the invention claimed, the sophistication of the field of technology
in which it occurs as well as on the relationship between the invention claimed and other inventions in
that field of technology (prior art). They therefore also understood that the duration of the process
would itself be variable and so could not be defined by, or confined to, a single, specific cardinalperiod of time.
Accordingly, in seeking to impose some reasonable limitation on a Member's freedom to
condition the acquisition or maintenance of intellectual property rights on compliance with reasonable
procedures and formalities, the TRIPS negotiators deliberately chose the flexible, ordinal standard of"unwarranted curtailment" to discipline curtailment of the period of effective protection that might be
caused by delays in the application-approval and granting process which were neither authorized by
law nor justified by the nature of the substance of the approval-granting process.
In the result there is no unique, universally applicable definition of what may constitute
"unwarranted curtailment" of the period of protection referred to in paragraph 2 of Article 62.
Accordingly, in an "authorized" system where the rules are "justified" by the nature of the patent
granting process and the need of the granting auth ority to be satisfied in respect of the novelty,
inventiveness and utility of the invention claimed, the "warrantedness" of the amount of curtailment
associated with the process will always be a question of fact.
(b) Would an average pendency period for patents of approximately five years be
considered a "reasonable period of time" which avoided "unwarranted
curtailment" of a protection term?  Why, or why not?
As noted in the answer to the question in paragraph (a), the "reasonableness" or
"warrantedness" of any particular pendency period related to a particular patent application willalways be a question of fact to be determined on the basis of the particular system used to process
applications, the circumstances relating to the particular application, the particular invention claimed
and the conduct of the applicant in the prosecution of that particular application.
In view of the foregoing, some may argue that "average pendency" periods may not be looked
at for the purposes of TRIPS treaty analysis and interpretation.  While this may in fact be a valid
criticism where a dispute is focussed on a particular patent application, it is doubtful that it has any
similar force where a dispute has a systemic focus on or, as in these proceedings, may or can be
related to the particular system used to process and grant patents in respect of claims to patentability.
That said, as a general or "average" matter, in Canada's view the answer to the first of these
two questions is, at least in respect of section 44 patents
2:  yes
                                                     
2 As explained in paragraphs 49 and 54 of Canada's First (Written) Submission New Act (section 44)
applications will not proceed to examination until the applicant files a request, and pays the fee, for
examination.  This introduces a new element in the approval process which, while under the obvious control ofthe applicant, introduces a statutory delay in the approval  process - one that has averaged 15 months for granted
patents and 27 odd months for those not yet granted, which was not present in the Old Act procedure - whichWT/DS170/R
Page 100
In answer to the second, the "Why, or why not", of these two questions is grounded in the fact
that, as suggested in paragraphs 54 and 76 of the Canada's First (Written) Submission, and given the
expert resources that Canada has made available for the conduct of the patent application approval
and granting process, in the normal course - a course that has been processing some 285,678 patentapplications
3 over the last ten years - the average pendency period has been sixty months, or five
years.  Consequently, for being an average pendency period achieved by an adequately staffed,
professional patent-granting organization which follows examination and granting procedures that
mirror international practice standards and, like other patent granting authorities, is subject to
application prosecution decisions which are in the c ontrol of applicants, Canada's five year pendency
period for New Act patents must be accepted as being a "reasonable" pendency period.
As such, a five year pendency period for (New Act) patents issued pursuant to Canadian or
any analogous national law must be accepted as being pendency periods that are "reasonable period[s]
of time" which avoid "unwarranted curtailment of the period of protection" bestowed on successful
applicants for the exclusive privileges and property rights which are conferred by a patent.
In conclusion Canada would note again, as it did when it responded orally to this question
when originally posed by the Panel, that it is aware of no coherent body of evidence which suggests
that the beneficiaries of the Canadian patent system are dissatisfied with the timeliness with which
patent applications are processed by the Canadian granting authority.
Where the users or beneficiaries of the system are not dissatisfied with the time taken to
process and grant a patent in response to an application it is difficult, if not impossible, to argue or
conclude that the effective term of protection which results from the process of approval and grant has
been or is being "unwarrantedly curtailed".
Q.2 What bearing, if any, do the general principles set out in paragraph 2 of Article 41 as
incorporated in Article 62.4 have on arguments put forward in this dispute concerning delays in
the grant of patents?
The US, the party of adverse interest in these proceedings, has not complained of or otherwise
put in issue the "fairness, equity, complexity, cost liness, timeliness or delay characteristics" of the
procedures for the examination, approval and granting of patents in Canada.  Consequently inCanada's view the principles articulated in paragraph 2 of Article 41 which, by virtue of paragraph 4
of Article 62, are to govern the "[p]rocedures concerning the acquisition and maintenance of
intellectual property [in this case, patent] rights" have no direct bearing on the "arguments put forward
in this dispute concerning delays in the grant of patents".
In making the foregoing observation Canada does not suggest that the principles of fairness
and equity articulated in paragraph 2 of Article 41 are irrelevant to Canadian or other Member entity's
legal and administrative procedures governing the application for, examination, approval and granting
of domestic patents.  They clearly must be a pa rt of, and relevant within, any rules-based system
which is governed by the fundamental principles of the rule of law.
                                                                                                                                                                    
typically took 2 to 4 years or an average of 3 years to complete.  Thus for Old Act patents Canada would be
more comfortable with saying that on average, the reas onable pendency period for an Old Act application would
have been 2 to 4, or, when averaged, 3 years.
3 Affidavit of Peter J. Davies, Chairman of the Patent Appeal Board of the Canadian Patent Office,
Paragraph 28.  Reproduced in its entirety as Exhibit No. 8 to Canada's First (Written) Submission.  Hereafter
cited as: Davies affidavit.WT/DS170/R
Page 101
In this respect Canada would note that all Canadian federal law is subject to the standards of
fairness, equity and non-arbitrariness articulated by the Canadian Charter of Rights and Freedoms ,
the Canadian Bill of Rights  as well as the complementary quasi-constitutional common law rules
governing procedural fairness.  The rules governing the application for, the examination, approval and
granting of patent rights are subject to these stan dards and have not been successfully challenged on
any of the "unfairness", "equitable" or "procedural fairness" grounds guaranteed by those
constitutional laws.
The fact that there is no such evidence supports Canada's conclusion that there is no
"unwarranted curtailment"  of the period of protection available under section 44 of the Canadian
New Act patent law and that the resulting fifteen years of patent protection offered by the New Act's
"first to file" system is both reasonable and compliant with the minimum standards required byTRIPS.
4
Since, under a "first to invent" system, the examination process takes place prior to the
commencement of the period of protection accorded to the exclusive privilege and property rights
conferred by a patent, the application of these principles to the "curtailment" analysis have littlerelevance to the amount of effective protection offered to patentees under the Old Act system
governing section 45 patents.  Subject to the payment of maintenance fees, the latter term, of course,
remains constant at seventeen years.
5
That said the application of those principles to a "first to file" system is, of course, critical to
the exercise of judging the compliance, comparability, equivalence and consistency of a "first to file"
system's effective period of protection with that provided by a "first to invent" system of patentability.
Q.3 Why is the word "available" used in conn ection with the term of patent protection in
Article 33 of the TRIPS Agreement but not in the provisions on the terms of protection of otherintellectual property rights?
In Canada's view the notion or concept of "availability" is, where not explicit as in Articles 26
(Industrial Designs) and 33 (Patents), inherent in all the "term of protection" provisions found within
sections 1, 2 and 4 to 6 inclusive of Part II of the TRIPS Agreement.
Canada takes this view because, although each was, in Canada's understanding, negotiated
separately, each reflects or reproduces in some measure the concepts or language used in the other
term of protection provisions.  Thus all of the term of protection provisions use a formula that first
requires or implies the availability of a term of protection, and, second, specifies an open-ended limit
on the duration or, what is perhaps a less precise measure, the ending of the term referred to.
Specifically and in the sequencing of the Agreement: the Copyright  term provision
(Article 12) provides that, "...such term shall be no less than 50 years from the end of [a variety of
commencement dates]..."; the Trademarks  provision (Article 18) provides that, "...registration...shall
be for a term of no less than seven years."; there is no term provision for Geographical Indications ;
the Industrial Designs  provision (Article 26) provides that, "The duration of protection available
shall amount to at least 10 years."; the Patents  provision (Article 33) specifies that, "The term of
protection available shall not end before the expiration of a period of twenty years counted from the
filing date."; last, the Layout-Designs  provisions use two formula (paragraphs 1 and 2 of Article 38),
the first specifies the term where registration is a precondition to protection and requires that "...the
term...shall not end before the expiration of a period of 10 years counted from the date of filing an
                                                     
4 See: Paragraphs 76 and 77 of Canada's First (Written) Submission.
5 See: Paragraph 73 of Canada's First (Written) Submission.WT/DS170/R
Page 102
application for registration..." and the second specifies that, where registration is not a required
prerequisite, the design "...shall be protected for a term of no less than 10 years from the date of the
first commercial exploitation...".
All these provisions therefore require, assume or imply "availability" of a term of protection
for the right at issue.  They also require, in the course of defining the term of protection, that it be a
minimum or open-ended term insofar as each provision makes use of some variant of "no less than",
"at least", or "not end before".
In these circumstances what is of interest in this dispute is not the use of the word (or concept
of) "available", but rather how the concepts of "availability" and "open-endedness" work in
conjunction with paragraphs 1 and 2 of Article 62.  The latter, as noted in paragraphs 74 to 76 of
Canada's First (Written) Submission and the answers to question 1(a) and (b) above, sanction the
erosion of the period of protection.  They, of cour se, sanction erosion of the term by acknowledging
the right of Members to "condition the acquisition or maintenance of intellectual property rights on
compliance with reasonable procedures and formalities so long as those procedures and formalities do
not result in an 'unwarranted curtailment' of the period of protection elsewhere prescribed in the
Agreement".
As is clear from the face of the provision, paragraph 2 of Article 62 only applies to sanction
the erosion of the term of protection otherwise specified by the Agreement where the right in issue is
subject to the "right being granted or registered".   The interplay between availability, open-endedness
and prerequisite procedures therefore only has significance in the cases of trademarks, certain layout-
designs and patents.
Where, as in the case of Trademarks and one class of layout-design, the term provision uses
the "no less than" open-ended formula, the formula can only be understood as describing an absolute
minimum term which will run from the date of the registration of the mark or design.  Accordingly,
the paragraph 2 provisions of Article 62 cannot operate to permit the erosion of the term of protection
to a period that is less than the absolute minimum specified by the applicable term provision.
However, where, as in the case of the Pate nt and paragraph 38.1 Layout-Design provisions,
the open-ended formulas provide that the term of protection "shall not end before the expiration of" a
specified period of years counted from a filing date of an application and are not, therefore, referable
to the date that the protection is recognized by registration or bestowed by grant, it is clear that theright only arises on registration or grant and, hence, the "effective" term that is defined by the "not
ending before a specified date" formula may, w ithout violating TRIPS, be less than the number of
years referred to in the formula for describing the period during, but not for , which protection of the
exclusive privileges and property rights must be available .
Thus in these latter two cases, those involving patents and paragraph 38.1 Layout-Designs,
the minimum term is not an absolute  minimum, but rather is a variable minimum which runs its
variable course within the specified period but will  vary within that period according to the time that
lapses between the date of filing for recognition of the right and the date on which the right is
recognized by the act of grant or registration, as the case may be.WT/DS170/R
Page 103
Q.4 Are you aware of any WTO Member that wa s obliged to apply the TRIPS Agreement as
of 1 January 1996 and that does not apply a patent protection term of 20 years from the date of
filing to all patents, including those patents that were in force and patent applications that were
pending as of 1 January 1996?
Canada is concerned that the question as posed, appears to suggest that, notwithstanding the
Article 1.1 licence to determine the appropriate method of implementing their TRIPS obligations,
Members have an obligation to "apply a patent protection term of 20 years from the date of filing".
Canada does not share this view, believing that the scope of the Article 33 obligation is
limited to ensuring that "The term of protection available  shall not end before the expiration of a
period of twenty years counted from the filing date.". (Emphasis added)  The concept of availability iscritical to the proper interpretation of Article 33 because paragraph 2 of Article 62 clearly
contemplates that rights granting and registration procedures will curtail  any period of protection
where, while the period is measured from an application filing date, the right does not arise until some
subsequent time when the right claimed is either registered or granted such that the "effective" term of
protection is  less than the period referred to in the formula used to define how the term of protection is
to be measured.
Against that background, Canada is aware of two WTO Member jurisdictions where the
Member has not adopted, or has not exclusively adopted, a term of protection provision that explicitly
uses the TRIPS reference to a "term of 20 years from the date of filing".
First, and on the evidence led by the US
6, it would appear to Canada that New Zealand law, as
amended in December 1994, provides that: "The term of every patent shall be twenty years from the
date of the patent."  Thus although this formula may exceed the minimum required by TRIPS, it does
not apply a "term of 20 years from the date of filing".  Accordingly, unless subject to specialdefinitions that are not available in the US exhibit, the quoted language would appear to include every
patent issued pursuant to New Zealand law whethe r before or after January 1, 1996.  It would thus
also appear to embrace patents issued after January 1, 1996 on the basis of an application filed before
that date.
Second, as noted in paragraphs 17 and 20 of Canada's First (Written) Submission, Canadian
patent law contains two term of protection provisions  one of which - section 44 - uses the TRIPS style
formula to provide that;
44.  Subject to section 46, 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.
and the second of which - section 45 - provides that;
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.
                                                     
6  See: US Exhibit 9.WT/DS170/R
Page 104
For the independent reasons advanced in paragraphs 57 through 83 and, subsequently, in
paragraphs 84 through 110 of Canada's First (Written) Submission, Canada takes the view and
submits that the term of protection prescribed by section 45 on the basis of "first to invent" patent
applications filed before October 1, 1989 makes a twenty year from filing term available  and is
equivalent, comparable, consistent, harmonious and co mpliant with the term of protection required to
be accorded to "first to file" applications by the TRIPS Agreement and as is prescribed by the
undisputedly TRIPS compliant provisions of  section 44 of the Canadian legislation.
Further, for the reasons referred to in the preceding paragraph Canada does not concede, as
assumed by the question, that it was obliged to apply the TRIPS Agreement to provide a term of
protection measured from the patent application filing date where, such of its patents that were not so
measured, are available for a twenty year from filing term and are substantively equivalent,
comparable and in harmony with the variable terms of protection that are available under the formula
of protection defined by Article 33 of the Agreement.
As noted in the introduction to this answer, it is Canada's position that the obligation set out in
Article 33 is an obligation to ensure that "The term of protection available  shall not end before the
expiration of a period of twenty years counted from the filing date."  (Emphasis added)  By virtue of
the freedom conferred on Members by paragraph 1 of Article 1 "to determine the appropriate method
of implementing the provisions of [the] Agreement",  Members are not required to implement this or
any other obligation by the adoption of any particular form of words or formula of measurement so
long as, as a matter of substance, the specified term is, as it is under section 45, available  on a "sound
legal basis" under the law and practice of the implementing Member.7
Q.5 Do you believe that a system in which the patent term is calculated from the date of
filing creates the same incentive to file a patent application promptly as a system in which the
patent term is calculated from the date of grant?
Canada has discussed or adverted to the incentives inherent in both of the "first to invent" and
"first to file" systems for awarding patents in paragraphs 36, 38 to 40 and 46 to 48 of its First
(Written) Submission.  In those paragraphs it made the point that the difference in incentive between a
"first to invent" and a "first to file" system related to the speed with which the application, once filed,
would be prosecuted by the applicant.  The calculation of the term of protection thus is more likely to
influence the speed of the prosecution of a patent application than it may influence the alacrity withwhich the application is itself filed.
In a "first to invent" system where the patent term of protection runs from the date of issuance
of the patent and the inventor's "secret" is protected by non-disclosure and trade secrecy laws prior to
grant, there is little if any systemic incentive to prosecute the application expeditiously.  There may,of course, be very substantial commercial or other self-serving strategic reasons that might negative
and reverse the absence of any such incentive in the application and granting system and so motivate
the applicant to prosecute its application with speed.
In contrast, in a "first to file" system where the term of protection runs from the date of the
filing of the application, where the amount of protection is eroded by the granting process and where
the contents of the application may be required to be made publicly known well before the patent
issues and so expose the invention to potentially infringing uses by third parties, the incentive to
prosecute an application expeditiously would appear to be considerably stronger.  However, here too
there may be very compelling commercial - read financing, manufacturing, distributional andmarketing - as well as regulatory - read marketing approval, reasons which may negate and reverse
                                                     
7 See: Paragraphs 37 to 39 of Canada's First Oral Presentation and the Appellate Body jurisprudence
cited and referred to in those paragraphs.WT/DS170/R
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the incentive to prosecute an application vigorously and so make the applicant indifferent to the speed
with which its application is processed.
While as a general matter it may be fair to say that the systemic incentives in the two systems
operate in different directions insofar as the speed of the processing of the application may beconcerned, it is less clear that the system used for the measurement of the term of protection has a
similarly divergent influence on the promptness of the act of filing itself.
This may be the case because, while a "first to file" system may seem to encourage early
filing so as to make the "first filer" the winner in a patent entitlement dispute with another inventor (or
the patent office), if the other inventor (or the patent office) establishes that another invention
constitutes "prior art" the patent is unlikely to issue to or, if issued, have any continued longevity forthe benefit of, the "first to file" applicant.
In this sense the risk that may appear to be negated by a "first to file" system may be illusory.
This may be so because in both the "first to file" and the "first to invent" systems the incentive to file,
as opposed to prosecute, promptly is ordinarily related to the risk that someone else may "invent" thesame or substantially or obviously the same subject matter and so defeat the claim to exclusivity
whether through a claim to be the "first to invent" or through an assertion of lack of novelty or
inventiveness notwithstanding a "first to file" date.
Undoubtedly a "first to file" system that allegedly ignores "first to invent" considerations
creates some incentive to file quickly, however a prior "unfiled"  invention, if it exists, will, for
undermining the novelty and inventiveness criteria of the claimed invention, ordinarily operate to
defeat the patentability of the "first filed" claimed invention.  In view of the foregoing it would appear
to be uncertain whether or not one can fairly conclude that a "first to file" system creates a greater
incentive to file a patent application promptly as compared to a "first to invent" system.
Q.6 Article 28 of the Vienna Convention on  the Law of Treaties 1969 reads as follows:
"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."
(a) Does Article 28 belong to those provisions of the Vienna Convention which are
part of customary international law?
Canada believes that a strong case can be made for the proposition that Article 28 of the
Vienna Convention on the Law of Treaties  (the Convention) has entered into the realm of
"customary international law".  It bases its view on the criteria required to promote a treaty norm into
a customary rule of law that are set out in North Sea Continental Shelf (Federal Republic of Germany
v. Denmark), [1969] I.C.J. p. 4, the leading case on this issue.  After sounding a cautionary note to the
effect that such a conversion "...is not lightly to be regarded as having been attained"
8, the
International Court of Justice went on to say that the following three criteria would be required todemonstrate that such a result had been achieved and that the treaty norm at issue had indeed matured
into a customary rule of international law.
                                                     
8 North Sea Continental Shelf at paragraph 71.  Reproduced as Exhibit No. 20WT/DS170/R
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The first of these criteria requires that "...the provision concerned should, at all events
potentially, be of a fundamentally norm-creating character such as could be regarded as forming the
basis of a general rule of law".9  The second requires that the norm at issue enjoy extensive and
virtually uniform application in State practice so as to show a general recognition that a rule of law or
legal obligation is involved.10  Thirdly the Court suggested that, as a matter of opinio juris , "Not only
must the acts concerned amount to settled practice, they must also be such, or be carried out in such a
way, as to be evidence of a belief that this practice is rendered obligatory by the existence of a rule of
law requiring it."11
In Canada's view the facts that: analogous rules expressing the presumption against the
retroactive application of new law to subsisting vested rights and obligations exist in the municipal
law of many, if not most, modern states; the rule has, as a rule of general application, been recreatedwithin Article 70 of the TRIPS Agreement; and, that  the Convention rule has, at least twice, been
referred to and applied by the Appellate Body
12, all argue that the three criteria of: creating a
fundamental norm; being widely endorsed by Stat e practice; and, State practice being confirmed by
statutory and international tribunal recognition, are met by the treatment accorded Article 28 of the
Convention.
This conclusion is strongly supported by the additional fact that the Appellate Body has, in
the Bananas case, described Article 28 as stating "a general principle of international law".13
(b) Which paragraph(s) of Article 70 refer(s) to "any act or fact which took
place…before the date of the entry into force of the treaty…"?
Although obviously drawn directly from Article 28, Canada believes that the reference to the
"date of the entry into force of the treaty" is not enti rely apt in the circumstances of this case.  This is
so because in the TRIPS context "the date of the entry into force"  being January 1, 199514 has a
particular or special meaning and is distinct from "the date of application of the [or this] Agreementfor the Member in question"  being, inter alia , January 1, 1996 for most developed country Members .
Within TRIPS, the latter date serves the function of a coming into force date for a particular or
particular class of Member as opposed to the date which is elsewhere normally referred to as "the date
of the entry into force".
The dichotomy does have significance within TRIPS because, as paragraphs 8 and 9 of
Article 70 make clear, some provisions trigger obligations from the "entry into force date" while most- but not all - others use the date of application as  the applicable triggering date.  However, Canada
has sought to avoid confusion by reading the reference as being a reference to the "date of application
of the Agreement for the Member in question" and would, in this light, answer the question as
follows.
Paragraph 1 explicitly refers to "acts which occurred before the date of application of the
Agreement for the Member in question".  As such it would, but for its reference to "the date of
application" rather than the "date of entry into force", appear to restate the substance of what
Article 28 of the Convention has to say about "acts which took place before the coming into force"
date of a treaty.
                                                     
9 North Sea Continental Shelf at paragraph 72.
10 North Sea Continental Shelf at paragraph 74.
11 North Sea Continental Shelf at paragraph 77.
12 Brazil - Measures Affecting Desiccated Coconut , WT/DS22/AB/R (21 February 1997) at page 15.
European Communities  - Regime for Bananas, WT/DS27/AB/R paragraph 235 and following.
13 European Communities  - Regime for Bananas, paragraph 235.
14 See: Paragraph 1 of Article 65 and the footnote, footnote **, to that paragraph.WT/DS170/R
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Paragraph 2, in referring to "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",
would appear to be addressed to "facts" which existed before the date of application but continued as
of that date.  It may not, therefore, fall within the ambit of this branch of the question.
Paragraph 3 by its reference to an intellectual property right that had entered into the public
domain before "the date of application of this Agreement for the Member in question", would clearly
appear to refer to "facts"  which occurred before the referenced date and were not continuing as of
that date.  However, the paragraph could also be more accurately characterized as addressing a
"situation which ceased to exist before the date of the entry into force of the treaty".
Paragraph 4, like paragraph 1, also makes explicit reference to "acts".  However, it limits the
universe of relevant "acts" to those that occurred "before the date of acceptance of the WTO
Agreement by that Member".  Given that paragraph 1 of Article XIV of the Final Act Embodying the
Results of the Uruguay Round of Multilateral Trade Negotiations  (Final Act) gave contracting-party
Members two years from the date of the Final Ac t (April 15, 1994) to "accept" the Agreement, the
date of acceptance may fall on either side of the date of application.  In the result this provision may
or may not address "acts" which occurred before the date of application of the TRIPS Agreement.
(However, since the acts referred to in the paragra ph are embodied in subject matter that exists on the
application date, this paragraph also has a hybrid character and could also be said to apply to a
"situation which had not ceased to exist" on the coming into force of the Agreement.)
Paragraph 5 refers to purchases of originals or copies of certain copyrighted materials which
occurred before "the date of application of this Agreement for the Member in question".  It would,
therefore, appear to fall within the branch of the question which is concerned with references to
"acts".  However to the extent which the "works" purchased may remain in the channels of commerce,this provision too would appear to have a hybrid character and, therefore, could also refer to a
"situation that continues to exist".
Paragraph 6 refers, by implication, to administrative "acts"  of Member governments which
granted compulsory licences to third parties without the authorization of the rights holder.  However,
here again as with paragraph 4, the paragraph only addresses a limited subset of such "acts" insofar as
the granting "act" had to have taken place before the date on which the TRIPS Agreement becameknown before the Member may rely on the "grand-fathering" exception created by the paragraph to
save an otherwise offending "compulsory licence".  (The date the "Agreement became known" is
generally accepted to be a reference to the date of the "publication"  of the Dunkel text of the
Agreement, that date being December 20, 1991.)
Paragraph 7 refers to applications for intellectual property right protection that were pending
on "the date of application of this Agreement for the Member in question".  It would, therefore, appear
to address "facts"  - application filings - which occurred before but had not been acted upon by the
date of application.  In this sense, the paragraph may more accurately be described as addressing a
continuing situation rather than an "act" or a "fact".
Finally, paragraphs 8 and 9 refer to "facts" - patent protection for pharmaceutical and
agricultural chemical products - or perhaps "situations" that did not exist "as of the entry into forcedate of the WTO Agreement" in the law of the Member in question and impose certain interim
obligations on such Members in respect of the products referred to.  That said, because these two
paragraphs in essence are concerned with the creation of new obligations, albeit of a transitional
nature, they do not appear to fit well within Article 70 which is predominantly concerned with the
transition rules that will govern the application of obligations specified elsewhere in the Agreement.WT/DS170/R
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They therefore may not be intended to make any re ference to "the acts, facts or situations that have
ceased to exist" which are at the heart of Article 28 of the Convention.
(c) Which paragraph(s) of Article 70 refer(s) to "any situation which ceased to exist
before the date of the entry into force of the treaty" or did not so cease to exist?Is the ongoing protection of an intellectua l property right at the date of entry
into force of a treaty, e.g. a patent that has been granted and which remains in
force at that date, within the scope of  "situation that ceased to exist"?
The answer to the first branch of this questio n has already been partially canvassed by the
answers to the questions in 6(b).  As noted in those answers, paragraph 3, although it may be
characterized as addressing "facts", is probably more clearly concerned with elaborating a clarifyingtransitional rule that denies the treaty's application to situations - the presence of subsisting
intellectual property rights - which had ceased to exist as of the application date of the Agreement for
the Member on whose territory the situation had once existed.
Similarly, but in response to the second branch of this question, a number of the provisions of
Article 70 have, as noted in the answers to the questions in 6(b), a hybrid character.  Thus while they
may be characterized as addressing some "act" as is the case in paragraphs 4, 5 and 6, that "act" can
be or is related to a "fact" or "situation" which, in intellectual property law, could have continuing
significance.  This relationship exists, for instan ce, in paragraph 4 where the "act" in question is
embodied in protected subject matter which may continue to be protected after the application dateand may therefore give rise to infringement liability.  The same may, with appropriate technical
modifications, be true in respect of the "acts"  implicitly referred to in paragraphs 5 and 6.
In summary of the answers to the first two bran ches of this question, Canada is of the view
that, with the exception of paragraph 3 of Article 70 - which itself is at least slightly ambiguous - thedrafting of the paragraphs of Article 70 as well as the of the included references to the fact situations
which the drafting seems to have contemplated, is sufficiently opaque or illusive to defeat clear and
unambiguous characterization of any of those paragraphs as clearly belonging solely to one particular
class of category of exempt subject matter referred to in Article 28 of the Convention.
In consideration of the third branch of this question Canada is of the view that patents which
were, before the application date of the Agreement, issued in respect of particular subject matter thatcontinued to exist as protected subject matter on the application date for the Member in question
cannot be easily dismissed as being "within the scope of a 'situation that ceased to exist'."
Canada holds this view because, in its understanding of the TRIPS Agreement, the Agreement
draws distinctions between: the vehicle which conveys an intellectual property right; the act, where anact is so required, which triggers the recognition of the right; and, the subject matter which attracts
both the right and the protection that is to be made available to the right holder.
Thus, as in this dispute, Canada understands that the Agreement imposes three essential
elements in respect of intellectual property rights.  First it requires that a vehicle of protection - in thisdispute, a patent - be available pursuant to Article 27 to protect qualified "subject matter" - in this
dispute, an invention which is novel, inventive and useful.  Second, it requires that protection of the
rights at issue be available for the period specified by the formula prescribed by the Agreement for the
definition or measurement of that period - in this dispute, the period referred to in Article 33.  And,
third, it requires that the subject matter shall be accorded a bundle of exclusive benefits - in thisdispute, the rights set out in Article 28.
In the result Canada also understands that, by virtue of paragraph 2 of Article 70, subject
matter which is "novel, inventive and useful", which was invented and protected before the
application date and which continued to be protected as of that date, would be entitled to protection byWT/DS170/R
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the patent vehicle pursuant to Article 27.1 and to the conveyance of the exclusive benefits, even if
enhanced by TRIPS, bestowed by virtue of Article 28.
Dissimilarly Canada does not understand, and it would take issue with the proposition, that
the patent, as the vehicle of the pre-existing and continuing protection, is itself "existing subject-matter" within the meaning of paragraph 2 of Article 70.  Unlike the subject matter of protection
which is the creation of an "inventor"  and subsists indefinitely, the patent, as the vehicle of
protection, flows from two "acts" - the act of applic ation and the act of grant - both of which pre-date
and were fully executed before the application date of the Agreement and respectively ask for or
consummate a time-limited bargain between the inventor and the State (and the third parties it
represents) as of the discrete moment in time when each "act" is executed.
There is nothing in the "subject matter" language of paragraph 2 of Article 70 which suggests
that the time-limited bargain consummated by the "act" of grant is a bargain that has been or was
intended to be disturbed by the obligations agreed to within TRIPS.  Similarly, there is nothing in the
"subject matter" language of paragraph 2 of Article 70 which suggests that the saving language of
paragraph 1 of Article 70 does not apply to preserve the bargain here at issue.  However, there is, incontrast, language in paragraph 2 of Article 70 which strongly suggests that its "subject matter"
provisions will not apply where the Agreement makes an alternative provision as it does, for pertinent
example, in paragraph 1 of Article 70.
That paragraph 2 language introduces the whole of the paragraph and reads: "Except as
otherwise provided for in this Agreement..."  In  Canada's view paragraph 1 of Article 70 provides
otherwise.
(d) Assuming that the reply to question (a) is in the affirmative, does Article 70
represent a "contracting out" of this customary rule of international law or
rather does it restate this rule?
As set out in the answer to question 6(a) Canada believes that a strong case can be made for
the proposition that Article 28 of the Convention has matured into a "customary rule of international
law".
That noted, Canada also believes that at least the first three paragraphs of Article 70 of the
TRIPS Agreement recreate or restate the rule in Article 28 of the Convention and do not "contractout" of its substance.  Canada has formed this belief because, in its view, in drafting Article 70 of the
Agreement the TRIPS negotiators in effect unbundled the "acts, facts and situations which ceased to
exist" trilogy set out in the Vienna Convention.
They did so, apparently, in order to distinguish between and provide separately for the
application or transitional rules which would be applicable to each category of circumstance included
in the Convention trilogy.  In so doing, however, they  made some modifications to the "acts, facts and
situations" language of the Convention to reflect the nomenclature and substance of intellectual
property law and practice.  The TRIPS recasting of the Convention trilogy is set out in paragraphs 1, 2
and 3 of Article 70.
First, paragraph 1 recreates the Convention rule against the retroactive application of new
rules to existing acts when, for TRIPS application purposes, it provides that:
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)WT/DS170/R
Page 110
Second, paragraph 2 expresses a "contrary intention" to the Convention rule respecting the
retroactive application of new rules to existing facts  or factual circumstances, which the TRIPS
negotiators refer to as "existing subject matter which is protected or protectable on the application
date" of the Agreement.  For TRIPS purposes however the contrary intention is, itself, subject to
exception since, for those purposes, it provides that:
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)
Third, paragraph 3 recreates the Convention rule against the retroactive application of new
rules to situations which ceased to exist before the entry into force date of the treaty.  The TRIPS
negotiators describe these situations as being those where intellectual property "subject matter" has
fallen into the public domain (and, therefore, has ceased to be protected).  Specifically and for the
purposes of the TRIPS Agreement, paragraph 3 provides that:
There shall be no obligation to restore  protection to subject matter which on the date of
application of this Agreement for the Member in question has fallen into the public domain .
(Emphasis added)
Q.7 Please provide an analysis of the meanin g that should be attached to the various
provisions of Article 70, in particular, explaini ng the meaning of paragraphs 2, 4 and 6 of
Article 70.  What is the relationship among the paragraphs of Article 70?
In responding to this question Canada notes that it is the US that has chosen to rely on a
selective passage of Article 70.2 to establish its claim. In Canada's view the burden of establishing the
applicability of Article 33 to Canada's impugned measure is for the US. In raising Article 70 as the
essential link to the applicability of Article 33 the burden to present a rational explanation of that
article remains with the US.  Canada's view of the appropriate analysis of the meaning that should be
attached to the various provisions of Article70 will address some of the positions advanced to date by
the US in its representations to the Panel.
In its first oral statement the US asserts at paragraph 16 that Canada's reading of Article 70.1
renders much of the rest of Article 70 "meaningless or wholly redundant". Canada disagrees, but even
if that were the case, that does not justify reading Article 70.1 in such a way as to render it
meaningless for the reasons set out in paragraphs 122 to 126 of Canada's First (Written) Submission
of December 2nd,1999, which speak to the applicable rules of treaty interpretation.
It is Canada's position that to the extent Article 70 imposes obligations on Members or grants
benefits to existing subject matter it should be read narrowly where there is any uncertainty as to its
scope or applicability.  In any event Article 70 can not be read to override the clear language of
Article 70.1 in the absence of compelling reasons presented by the US.
Article 70 arises under TRIPS Part VII, Institutional Arrangements: Final Provisions.
Article 70.2 is concerned with the protection of existing subject matter.  In respect to patents, which is
the only class of intellectual property at issue in this dispute, patentable subject matter is defined
under Article 27.  That article is the first of eight within TRIPS that make up Section 5: Patents.
Subject to the exceptions described in paragraphs 2 and 3 of Article 27, patents are available
for any inventions, whether products or processes, which meet the qualifying criteria of "novelty,
inventiveness and utility".  Article 28 provides that a patent shall confer on its owner certain exclusive
rights.  Article 31 authorises certain uses without authorization of the right holder and in so doingWT/DS170/R
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refers expressly to "other use of the subject matt er of a patent".  Accordingly, the subject matter
referred to in Article 70.2 as it relates to patentable subject matter is  as defined in Article 27 and does
not, as contended by the US, include a patent itself.
In Canada's view Article 70.2 is a provision which "Except as otherwise provided for in this
Agreement" gives rise to obligations to all existing subject matter (inventions in this case) at the date
of application of this Agreement and which is prot ected as of that date or which meet, or comes
subsequently to meet, the criteria for protection under the terms of this Agreement.
Patentable subject matter is defined under Article 27, that is products or processes which are
new, involve an inventive step and are capable of industrial application.  Therefore, any invention
which meets or is capable of meeting the criteria set out in Article 27 and which existed on theapplication date of the Agreement is entitled to the benefit of the obligations under the Agreement
except, of course, as otherwise provided.  The exception is not limited to exceptions which are
described in Article 70.2 as argued by the US in paragraph.11 of its first oral submission.  The
exception expressly refers to the whole Agreement and not just paragraph 70.2.  Nor does the quote
cited by the US in the noted paragraph support its thesis because the example given in the quote of anexception contained in Art 70.2 is unambiguously illustrative in nature and in no way suggests
exceptions are limited in the manner contended for by the US.
It is apparent that the language employed in Articles 70.1 and 2 is similar.  Namely, "this
Agreement does not give rise to obligations in respect of acts which occurred before the date ofapplication of the Agreement..."and "This Agreement gi ves rise to obligations in respect of all subject
matter existing at the date of application of this Agreement...".  In Canada's submission the apparent
conflict between these two paragraphs is for the US, as the party relying on the provisions, to resolve.
That is the US must ensure both paragraphs have meaning and its failure to do so should result in its
complaint being dismissed.
One interpretation that is open that results in Canada's section 45 patents not being subject to
the Agreement is to recognise that  the act of filing an application for a section 45 patent and the
administrative act of issuing such a patent  are essential to initiating a term of protection under Article
33.  In the event that either of these acts occurred before the date of application of the Agreement no
obligations in respect of the term of protection accorded to the patent arise under the Agreement.
In this respect Canada notes that by implication the US appears to accept that an
administrative act is included within the scope of Article 70.1.  At paragraph 13 of its first oral
statement the US, submits that acts of customs officials permitting entry of counterfeit or pirated
goods prior to the date of application of the Agreement are within the scope of acts not subject to
obligations under the Agreement.
In Canada's view there are no legal distinctions between the administrative character of these
official acts of customs and patent officials.  Canada further notes that in Article 70.6 an
administrative act is given express recognition as excluding the application of Article 31 for Members
"where authorization for such use was granted by the government before the date this Agreementbecame known".  This formulation in Article 70.6 is consistent with the administrative act of issuing a
patent being found within the scope of Article 70.1.
This interpretation of Article 70.1, that is excluding section  45 patents from the obligation
under Article 33, does not, in the words of the US, imply that other paragraphs of Article 70 aremeaningless or wholly redundant.  Patentable subject matter under Article 70.2 would  include the
obligations set out under Article 28 to confer certain exclusive rights on a patent owner, and the right
to be paid remuneration under Article 31 (h) where a Member sanctioned a use unauthorised by the
right holder for patentable subject matter.  These examples are not intended to be exhaustive butWT/DS170/R
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illustrate that there is a rational resolution of the apparent conflict between paragraphs 1 and 2 of
Article70 and which results in section 45 patents not being subject to Article33.
The question further asks for direct comment on the meaning of paragraphs 4 and 6 of Article
70 and which the US also claimed in its oral statement were rendered redundant by its inaccuratecharacterization of Canada's statement in relation to Article 70.1.
The transitional rule in Article 70.4 is clearly intended to apply in circumstances in which
TRIPS requires a Member to protect subject matter that the Member did not previously protect, and
has no application to the circumstances here. Article 70.2 gives rise to certain obligations in respect to
the subject matter at issue but not in respect of patents.  Where for example there was a field of
technology not previously protected under the laws of a developed Member, and the TRIPS
Agreement now requires it be protected, implementing legislation would be required to provide for
the issuance of patents for existing inventions (subject matter) in that field of technology.
It may be that persons were using inventions in that field of technology prior to the
application date of the Agreement.  The transitional rule in Article 70.4 applies to acts which were not
infringing at that time but which subsequently became infringing once, as in Canada 's example,
patents in the field of technology are  issued in accordance with the implementing legislation.
Article 70.6 represents another exception available to Members in respect to existing subject
matter. It is in effect a grand-fathering clause wh ich protects pre-existing compulsory licences granted
by the government before the date this Agreement became known.
Canada agrees with the assertion of the US in paragraph 14 of its oral statement that the
Agreement is not retroactive, at least it is not in respect of concluded, pre-application date acts.  This
is consistent with international law as expressed in Article 28 of the Vienna Convention and
Article 70.1. which provides that the Agreement has no application to "acts" which occurred prior to
the application date of the Agreement.
At paragraph 17 of its oral statement the US makes the rather extravagant claim that if section
45 patents are excluded from the Agreement then all forms of intellectual property that existed prior
to the application date would receive "absolutely no protection under TRIPS" and then advances  "in
terrorem"  arguments that Members could revoke, for no reason at all, patents issued before January
1996 and still remain in compliance with TRIPS.
Such statements without more do little to enlighten the understanding of the obligations set
out in Article 70.  The scope of the word "acts" in Article70.1 as suggested by Canada does not, for
example, exclude the results of creative acts from the obligations which arise under Article 70.2 as
implied by the US.  The act of creation within the contemplation of TRIPS results in subject matter.The product is not itself an "act".  Inventing so mething may be an act but the resulting invention is
subject matter and not an act.  TRIPS obligations apply to subject matter and not acts.  Article 70.1 on
the other hand applies to acts but not to subject matter.
In Canada's view the relationships that exis t between the various paragraphs of Article 70
broadly exceed the issues that need to be decided in this complaint.  As noted in response to question
6 (d) it appears that paragraphs 1, 2 and 3 of Article 70 could be said to reflect the "acts" "facts" and"situations which ceased to exist" set out in Article 28 of the Vienna Convention.
Article 70 is concerned with the protection of existing subject matter.  Paragraphs 1, 2 and 3
describe generally what obligations the Agreement does and does not give rise to. Paragraphs 4 ,5, 6
and 7 describe certain special situations of application.WT/DS170/R
Page 113
Finally paragraphs 8 and 9 of Article 70 are concerned with what has come to be referred to
as "mail box" provisions requiring a Member to make special provision for certain pharmaceutical and
agricultural chemical products where patent protection was not available prior to the entry into force
of the WTO Agreement.  These latter two transitional provisions do not appear to contain any
particular relationship to the other paragraphs of Article 70 beyond providing "protection for existingsubject matter" which, of course, is consistent with the general purpose of the Article.
II. REPLIES TO QUESTIONS FROM THE PANEL TO CANADA
Q.15 *Concerning the interpretation of "appropri ate method" in Article 1.1, do you believe
that, had a new Act not been implemented in Canada in 1989, the old Act would have been an
appropriate method to comply with the TRIPS Agreement?
This is, clearly, a "counterfactual" speculative question.  Canada's 1994 decisions relating to
its implementation of its TRIPS obligations were necessarily conditioned on the state and scope of its
then existing laws and practices and their degree of compliance or consistency with its then
impending TRIPS Treaty obligations.
However, based on the discussion and elaboration of the legislative context and history of the
1989 amendments to Canada's patent laws which is se t out in paragraphs 22 to 30 of Canada's First
(Written) Submission, one might, as a matter of reasoned speculation, conclude from the reasons that
led Canada to introduce those far reaching amendments in 1986 that, had it not made those
amendments, it would, in the interests of modernizing its patent legislation and administrative practiceand in switching to a "first to file" from a "first to invent" system, probably have, in the further
interest of achieving the harmony in patenting systems desired by the TRIPS negotiators,  decided to
make similar amendments to its patent laws, within its TRIPS implementing legislation.
Notwithstanding this informed speculation, it is germane to note that since the protection
provided to patents and patentees under the Old Act - being the legislation that would have been in
force in 1994 had the 1986 amendments not been made - is, and was in 1994, substantively equivalent
to the protection prescribed by the TRIPS Agreement.
15  It is similarly germane to note that under
section 45 of the Old Act the term of protection  available  to patentees was, when measured from the
TRIPS filing date perspective, then as it is now, more certain than and equal or superior to the
variable minimum term prescribed by TRIPS.
All of which is to say that, since the equivalency and availability arguments would have been
available to Canada in 1994 when it was drafting and enacting its TRIPS implementing legislation, it
could then, given the Article 1.1 freedom to chose an appropriate method of implementation, have
chosen not to amend its term of patent protection statutory provisions and still have fulfilled its TRIPS
patent term obligations.
                                                     
15 As noted in paragraph 80 of Canada's First (Written) Submission, NAFTA would appear to
recognize and, by recognition, endorse the equivalence here under discussion.WT/DS170/R
Page 114
Q.16 *You stated that the average pendency peri od, described as the period between the filing
date and the date of grant, is approximately 60 months or five years for those applications that
were filed after 1 October 1989 and for which patents were granted.  For those patents that
were filed prior to 1 October 1989:
(a) please confirm that the average pend ency period was two to four years
(paragraph 72 of your First Submission); and
As requested Canada confirms that the average pendency period in respect of patent
applications filed prior to October 1, 1989 has, historically, been two to four years as stated in
paragraph 72 of its First (Written) Submission.  This fact is set out in paragraph 8 of the Davies
affidavit - Exhibit 8 to Canada's First (Written) Submission - and can be further confirmed byreference to Exhibit B to that affidavit.
In confirming this fact Canada would go on to note that the difference between the average
pendency period under the Old Act - two to four years - and the average pendency period under the
New Act - five years - is, on an average basis, ex plained by the provisions in the New Act which hold
an application in abeyance until the applicant fulfils it s obligation to file a request, and pay the fee, for
examination.
As discussed in paragraphs 53 and 54 of Canada's First (Written) Submission, although
applicants are given five years from their filing date in which to meet these requirements, they have,on an average basis, filed their request and paid the fee for examination fifteen months after filing
their applications, in the case of patents which have issued; or, twenty seven odd months, in the case
of patents that have not yet issued.  The fifteen or twenty seven month periods are, roughly speaking,
equal to the difference between the New Act and the Old Act pendency periods.
(b) what were the shortest and longest penden cy periods for those Section 45 patents
that have been granted?
By reference to the same data base used to calculate the number of patents that might have
been affected by the term of protection obligations defined by Article 33, the Chairman of the
Canadian Patent Appeal Board reports that: the shortest pendency period for a section 45 patent which
has been granted is: 2.76 months.
By reference to the same data, the longest pendency period for a section 45 patent which has
been granted is reported as having been: 493.08 months (or 41 odd years).
16
Q.17 *Is the term "term of protection" as used in Article 33 synonymous with a period of"exclusive privilege and property rights" as used in your First Submission?  Please explain why
or why not.
No.  As used in reference to Article 33, (and as they would also be used in an analysis of
paragraph 1 of Article 38) the two terms are not synonymous.
As explained in paragraphs 74 to 78 of Canada's First (Written) Submission and more
extensively canvassed in the answer to Question 3 set out above, the two terms differ for the
following reason.  The term of protection referred to in Article 33 defines the period during which
protection shall be available  but during which the "exclusive privilege and property rights" conferred
                                                     
16  See: E-mail message from Peter Davies, the Chairman of the Patent Appeal Board to Rob Sutherland-Brown
dated January 4, 2000 and reproduced as Exhibit No. 21.WT/DS170/R
Page 115
by a patent may not yet exist  because, by virtue of the operation of the granting procedures
sanctioned by paragraphs 1 and 2 of Article 62, the patent conferring the exclusive privilege and
property rights associated with a patent once granted, has not been granted , notwithstanding that the
period of nominal protection, as measured from the filing date of the patent application, has already
begun to run.
Q.18 *In your first oral statement, you seemed to imply that in a first-to-file patent system,
where four or five years elapsed before a patent was granted, the period of protection of that
patent would be 16 or 15 years.  However, does the period of protection run from the date of
filing, rather than the date of grant, so that the period of effective protection is 20 years?
In Canada's first oral statement it did indeed say - throughout paragraphs 13 to 26 - that the
effective term of protection under the combined operation of Article 33 and paragraph 2 of Article 62
would invariably be less that the period referred to in Article 33 as being the minimum period during
which the term of protection must run. However, as explained in the answer to Questions 17 and 3 as
well as in paragraphs 74 to 78 of Canada's First (Written) Submission, the period of "effective"
protection can only begin to run once the patent  (or other intellectual property right which is subject
to prerequisite granting or registration procedures)  is in fact granted  or registered, as the case may
be.
If a patent has not issued, it attracts no exclusive privilege or property right.  Accordingly
where the defined period of protection begins to run before the right is granted, the defined periodcannot confer and does not define "a period of effective protection" for the period defined.  Because
of the separation in time between the date of application and date of grant, the period of "effective"
protection will, as a practical matter, always be less than a period that is defined to commence before
the granting, or other formal recognition, of the right.
Q.19 *(follow up to previous question).  If, during the, say, five years that a patent is pending
in Canada, the applicant can sell the claimed product in Canada, why would it be willing to act
so as to delay the grant, given that it could be at  risk if it were to operate in the market prior to
grant?  Would it not wish to receive th e grant of patent as soon as possible?
While it is indeed possible for a patent applicant to sell its invention in the market prior to the
date of grant, it is unlikely that a typical applicant would do so because, as the question notes, itwould risk losing its opportunity to eventually obtain or thereafter maintain the exclusive right to
exploit the invention.  (The fact that the absence of any exclusive right would probably have a
negative effect on the price that such an applicant could obtain for its invention or the product of its
invention, may also operate to discourage such pre-grant selling.)
As to the second branch of the question, Canada would note that the question will almost
invariably be a question of fact.  There are any number of factors which may influence an applicant 's
behaviour or decisions in both seeking patent protection itself and in prosecuting its application for
protection once it has made the decision to do so.  The applicant's decisions in this respect are very
subjective and it is not therefore possible on a prospective basis to elaborate a theory or to identify
any particular factor which will explain the conduct of any given applicant in making a decision to
accelerate or retard the filing or prosecution of a patent application.
Some of the factors that commonly influence these decisions include: whether or not the
applicant can or is ready to manufacture; where it cannot or is not, whether the applicant can licence
its invention to a third party; whether the applicant has or has located the financial resources to exploit
the invention; whether the applicant has or has not arranged for the marketing and/or distribution ofWT/DS170/R
Page 116
its invention; and, where the invention or the product of the invention is regulated, whether or not it
has, or can expect to obtain, marketing approval from the competent authorities.
Q.20 *You state in paragraph 72 of your First Submission that it took two to four years to
complete the "examination process" for Section 45 patents and in paragraph 76 that it took fiveyears to complete the "examination process" under the new Act.  Please confirm that the term
"examination process" as used in paragraphs 72 and 76 covers the period between the filing
date and the date of grant.  (Note that you use the term "examination" elsewhere to describe the
period during which the patent office examines the patent application).
Canada confirms that in both paragraphs 72 and 76 of its First (Written) Submission it has
used the phrase "examination process" as a term of art to describe the period - often referred as thependency period - between the application filing date and the date of grant.
Canada acknowledges that it has, in several places in its submissions, used the word
"examination" to describe either: the activity of th e patent authority in "examining" the patentability
of the claims in an application, or the period during which that activity takes place.
The different terms or references are intended to contrast the "shorter" actual or per se
"examination" activity with the "longer" "examination process" which includes all pre-grant activities
or delays, being: the period before a request for "e xamination" is made (New Act only); the time spent
in the pending queue awaiting "examination";  the "examination" period itself; and, the delay periodbetween the notice of approval and the actual grant.
Canada trusts that the appropriate or intended meaning of either term will be clear in the
context of use and, where that is not the case, Canada would be pleased to clarify its use or intended
meaning in such instances.
Q.21 It is argued that whereas the protection term in respect of patents granted under Section
45 may be longer or shorter than 20 years from fi ling, that this provision is consistent with
Article 33 because the average term is in excess of 20 years from filing.  How do you reconcile
this fact with the Panel's finding in United States—Section 337 of the Tariff Act of 1930  that "an
element of more favourable treatment would only be relevant if it would always accompany and
offset and element of different treatment" and its rejection of "any notion of balancing more
favourable treatment…against less favourable treatment"?
This question would appear to reflect the assertions of the US
17 that Canada's arguments are
based upon "an impermissible averaging methodology" .  This misapprehends Canada's arguments
which do not rely on any such "averaging methodology".  Moreover they do not assert that whenallegedly term-deficient section 45 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.
Nor do Canada's arguments assert that, for TRIPS interpretative purposes, the "more
favourable treatment" accorded to surplus term section 45 patents otherwise compensates for the
alleged deficiency in the term granted to so called "term-deficient" section 45 patents.
Canada's arguments as set out, respectively, in paragraphs 67 to 83 and paragraphs 84 to 110
advance two independent, albeit mutually reinforcin g, propositions which: first assert the equivalency
of the terms of protection available under the two filing and term measurement systems; and, second,
assert the availability of the TRIPS twenty year from filing term under section 45 and other provisions
                                                     
17.See: Paragraph 14 of its First (Written) Submission  and paragraph 5 of its (First) Oral Statement.WT/DS170/R
Page 117
of the Old Act, notwithstanding that under the Old Act the term or period of protection granted ran, by
virtue of the statute, from the date of grant.
The first proposition, in summary characterization, argues that while Old Act (section 45)
patents confer a guaranteed, constant seventeen years of protection for the "exclusive privilege andproperty rights" conferred by a patent measured from the date of the grant of the patent, New Act
(unambiguously TRIPS compliant section 44) patents confer a variable period of protection for the
"exclusive privilege and property rights" conferred by a patent which variable period has, in 89 per
cent 
18 of those instances where a section 44 patent has been issued, conferred seventeen or fewer
years of protection for those "exclusive privileges and property rights".  (For the purposes of this type
of analysis, Canada considers that, where the term of "effective" protection under one patent granting
system is variable, it is inappropriate to restrict or limit its equivalency comparison to a system usinga fixed term of "effective" protection by referring only to the exceptional, upper-limit results
achievable under the variable term regime.)
As noted generally elsewhere above and specifically in paragraph 77 of Canada's First
(Written) Submission this curtailment from the term  referred to in Article 33 occurs because the
"examination process" has, under the aegis of Article 62, eroded the period of protection defined by
the term measurement criteria set out in Article 33.  In the result to two systems produce equivalent,
comparable, harmonious and consistent terms of protection for the "exclusive privileges and property
rights" that are here at issue.
Second, and again in summary characterization, Ca nada has argued that, while the section 45
patent term provision guarantees seventeen years of protection from the date of grant for the
"exclusive privileges and property rights" conferred by a patent, when viewed from the perspective of
the patent application filing date, it also makes a twenty year from filing date term available, without
exception, to any patent applicant wishing to view and obtain protection on that basis.  The secondargument concludes with the proposition that, since the twenty year term from filing was available to
any applicant who sought it, where an applicant did not seek to obtain the twenty year term it would
itself be responsible for the deficiency and could not later complain of the deficiency.
Given the substance of these two arguments and the difference between them and what was at
issue in the Section 337  case which has been cited by the US and quoted in the question, Canada does
not agree that the referenced jurisprudence has any pertinence or application to this dispute or theagreed facts from which its arises.
Q.22 *You argue that the term of protection under the old Act and the new Act are
equivalent.  You also argue that the United States  has failed to establish a prima facie case that
Article 33 has retroactive application.  In order to clarify these arguments, could you indicatewhether, in your view, if the old Act provided a much shorter term of protection, say 10 years
from grant, such a provision would comply with the TRIPS Agreement, because the TRIPS
Agreement lacked retroactive application?
In its oral response to this question Canada suggested that in order for a ten year from grant
term to be equivalent to the term defined by Articles 33 and 62 of TRIPS, the granting procedures
applicable to New Act patents would need to involve 10 years of delay.  This, in Canada's initial view,
appeared to lack balance and justification given the nature and purpose of the granting procedures.
Canada continues to hold this view.  It would however elaborate on its verbal response by
noting that if the term set out in section 45 were 10, not 17, years and all other provisions of both the
                                                     
18 See: Exhibit F to Davies Affidavit.WT/DS170/R
Page 118
Old and New Acts remained constant as they now are, then both the "equivalency" and the
"availability" arguments and analyses would fail.
The "equivalency" argument and analysis would fail because the constant period of protection
for the "exclusive privilege and property rights" offered by the hypothetical section 45 ten yearguaranteed term - being ten not seventeen years - would fall far short of and clearly not exceed the
normal fifteen years of "effective" protection afforded to those exclusive privileges and rights by the
term of protection formula prescribed by the conjoint reading of Articles 33 and 62.
Similarly, the "availability" argument and analysis would fail because the statutory provisions
which are catalogued in paragraph 43 of Canada's First Oral Presentation and which provide a "sound
legal basis" for an applicant's ability to prosecute its application without any rights-defeating penaltyfor at least 42 months after filing its applic ation would, when added to the guaranteed base
hypothetical term of ten years from grant, only result in a total of thirteen and one half years of
protection being available to an applicant.  This clearly contrasts unfavourably with the twenty and
one half years of protection that are available to applicants when the same calculation is made in
respect of a system using a seventeen year from grant base term.)
As the Panel knows it is Canada's position that, while the US has not made out its
interpretative case respecting the application of paragraph 2 of Article 70 to the application of
Article 33 to Canada's section 45 patents, the US's spare analysis of, and attempt to apply, that
paragraph in this dispute is irrelevant in the face of the undisputed facts that underlie the dispute.  It isirrelevant or redundant for two reasons.  It lacks relevance because, first, on a substantive basis, the
"effective" protection available under section 45 is equivalent to the "effective" protection available
under the TRIPS system of term measurement.  Second, it lacks relevance, because, pursuant to an
undeniably sound statutory - that is, legal - basis, a twenty year from date of application term of
protection was available to any Old Act applicant that sought to measure and obtain its term of
protection on that basis.
In sum, therefore, because section 45 is, for reasons of equivalency and availability, TRIPS
compliant, no change in Canadian law is required.  Of course, where no change in law is required (or
made), there is no need to provide for or, as in this  case, apply a transitional rule, such as the rule in
paragraph 2 of Article 70, to regulate the transition form one set of laws to another.  Where there is no
need, there is irrelevance and, as in this case, redundancy.
Against this background of irrelevancy and redundancy of the application of Article 70 in
these proceedings, Canada would address the Panel's hypothetical question by noting that, where both
the "equivalency" and the "availability" arguments and analyses have no application, the relevancy of
Article 70 would acquire life.
Were it to so spring to life and become a determinative factor, and Canada does not concede
that it does or has (except in the face of the hypothetical character of the question put), then Canada
would again observe, as it has at paragraphs 126 to 129 of its First (Written) Submission and
paragraphs 58 to 68 of its First Oral Presentation, that, as suggested in the answers to questions 6 and7 elaborated above: paragraph 2 of Ar ticle 70 has no application to patents per se,  since patents are
not within the meaning of the "subject matter" referr ed to within that paragraph; and, paragraph 2 of
Article 70 being, by its own terms subject to other provisions of the Agreement, cannot and does not
operate to usurp the saving provisions respecting pre-application date "acts", such as the act of filing a
patent application and the subsequent act of granting the patent, that are explicitly protected byparagraph 1 of Article 70.WT/DS170/R
Page 119
Q.23 You indicated in paragraph 7 of your first oral statement that your first two arguments
were independent and stand-alone.  Which is  your principal argument and which is the
alternative?  Is the third argument independent of, or complementary to, the first two?
In Canada's First Oral Presentation it presented three principal arguments as well as a fourth,
attacking the sufficiency of the US evidence respecting "subsequent practice". Although within the
context of these proceedings the principal arguments are related, each is independent and not
subordinate to another.
Nor is any one of the principal arguments alternative to the others in the sense that if one fails,
then the second or third comes into play as a subsequent "fall back" argument of lesser force than any
of its predecessors in a sequenced hierarchy.  This is so because each establishes an independentrationale for the Panel to dismiss the US complaint.
The first two arguments, which are admittedl y complementary and mutually reinforcing,
rather than merely "related", advance reasons, as matters of fact and the substantive municipal law of
Canada as well as of the substantive treaty law of the TRIPS Agreement, explaining why thesubstance of section 45 of the Canadian Patent Act  is consistent with TRIPS obligations and
standards.  The substance of section 45 does so for two reasons.
The first reason is that, as a matter of substance, section 45 provides for equivalent "effective"
protection for the "exclusive privileges and property rights" it confers as compared to the "effective"protection accorded to those privileges and rights by a patent that is issued under an undeniably
TRIPS compliant system.  The second is that, again as a matter of substance, the Old Act law includes
provisions for ensuring that the term of protection available pursuant to section 45 is not required to
end before the expiration of a period of twenty years counted from the filing date of the patent
application.
The third argument advanced in Canada's First Oral Presentation presented independent
argument as to why the US had failed to make out a prima facie case that the transitional rule set out
in paragraph 2 of Article 70 applied to "acts" of application and grant that pre-dated the application of
TRIPS for Canada.
The third argument contends that paragraph 2 of Article 70 is limited in its application to
"subject matter" of intellectual property protection and thus has no application to patents and the other
"vehicles" of such protection.  It also contends that , since by its own terms, the paragraph is subject to
the other provisions of the TRIPS Agreement, it did not, nor did the US establish that it did, have any
application to "acts" that pre-dated the application of the Agreement and were, for that non-retroactive
reason, saved by the substance of paragraph 1 of Article 70.
In addition to the three principal arguments, Canada's fourth argument challenges the
"subsequent practice" evidence led by the US and demonstrates that that evidence was deficient
because the practice referred to did not arise out of circumstances that were the same as, or even
closely similar to, the circumstances that prevail in Canada in respect of the substance of theprotection afforded under section 45.WT/DS170/R
Page 120
Q.24 *You argue that an applicant can obtain a patent protection term of 20 years from the
date of filing under Section 45 by controlling the prosecution process which is "within the
private decision making capacity and strategic control" of the applicant.
(a) How could patent applicants whose applications had been examined prior to the
entry into force of Bill C-22 on 17 November 1987 obtain a patent protection
term of 20 years from the date of filing?
The substance of the Old Act patent rules and system had, prior to 1987 (or, perhaps more
accurately, prior to 1989 when the 1986 proposed amendments were brought into force), been in place
since the Old Act had last been consolidated in 1952.  Therefore at any time after 1952 any applicant
who had been interested in obtaining a term of pr otection which, when measured from the applicant's
filing date, equalled or exceeded twenty years from that date could have obtained the desired term in
the same manner as described in paragraph 10 of the Davies affidavit, paragraphs 36 to 38 of Canada's
First (Written) Submission and paragraphs 33 to 49 of Canada's First Oral Presentation.
It may be implicit in this question that before the New Act amendments or the TRIPS
obligations were law or became known, this possibility would have been irrelevant.  No one would
have organized their patent interests in a way that would have delayed the earliest possible grant of
the patent sought.  All the evidence contradicts this hypothesis.
The evidence, both that which relates to the whole universe of patent applicants and that
which relates to pharmaceutical patent applicants, shows that sixty per cent of all applicants filing
applications before October 1, 1989 and an overwhelming majority of pharmaceutical applicants
filing applications before October 1, 1989, managed their applications or otherwise behaved so as to
obtain patent terms that, when measured from the application filing date, exceeded the twenty year
period counted from the applicable application filing date.
(b) What remedies, if any, would an applicant be able to invoke in case of an
unauthorized use by a third party prior to the grant of a patent?
Typically speaking "first to invent" patent granting systems do not provide pre-grant remedies
to those who, pre-grant, are merely "applicants" for rights that, until granted, have not come into
existence.  In this situation there is no exclusive right in existence which would support the concept of"unauthorized use".
Such systems do, however, typically preserve the confidentiality of the contents of the
application.  Accordingly, any Old Act "first to file" applicant would enjoy any remedy it would
otherwise at law enjoy to protect its own commercial or inventive confidences.  In the normal casesuch recourse would be available under the common law of trade secrecy.
(c) If a patent applicant might suffer prejudice prior to the grant of its patent, why
would it not be in its best interest to obtain a speedy examination?
The risk of prejudice to a patent applicant's anticipation or expectation of obtaining a
monopoly right for its invention before the grant of an anticipated patent, is always present.  It is, as
suggested in the answers to questions 5 and 19 without doubt one of the factors that may influence a
patent applicant to accelerate either the filing or the prosecution of an application.  However, as
particularly noted in the answer to question 19 there are many factors at play that may reverse whatappears to be an obvious motivation to obtain patent protection as soon as possible.  There are
however a large number of compelling reasons why a patent applicant might chose to retard its filing
or its prosecution of a patent application.WT/DS170/R
Page 121
Unfortunately, it has not proven easy to elaborate a coherent or straightforward theory to
reliably explain, on an anticipatory basis, why or why not patent applicants may chose to behave in
one manner or another or to identify one or more factors as being predominant motivators in what are,
in final analysis, private, individual decisions by each applicant.
Q.25 Is it not the responsibility and obligation of the government to provide a patent term
ending at least 20 years from the date of filing, especially in light of the fact that Article 33
provides that the term of patent protection avail able "shall" not end before the expiration of a
period of twenty years counted from the filing date?
No.  It is, as set out as a matter of fact in paragraph 8 of Canada's First (Written) Submission
the responsibility and obligation of each Member to implement its treaty obligations.  Thus, in thecontext of this dispute and the obligation described by Article 33, it is the responsibility and
obligation of each Member to ensure that "The term of protection available [in respect of patents]
shall not end before the expiration of a period of twenty years counted from the filing date [of the
patent application].".
Given the freedom granted by paragraph 1 of Article 1 of TRIPS, this obligation does not
extend to requiring that a Member implement its obligations in the manner suggested by the question.
This is particularly the case where, as in the case of Article 33, its facial obligation is refined and
modified by the provisions of paragraph 2 of Article 62 which explicitly authorize the reasonable or
"warranted" curtailment of the term defined by Article 33.
In this respect and in light of the last branch of this question, Canada notes that the word
"shall" in Article 33 refers to the expiry date of the patent and not to the obligation of Members to
make available a term of protection that "shall not end before the expiration" of the period referred to.
Thus the obligation set out in Article 33 is not a responsibility or obligation for Members to
adopt laws that force patent applicants to pursue their applications or pay their maintenance fees in a
manner which is contrary to their own perceived best commercial or other interests.  As the US
conceded in an oral response to a question put by Canada, where a patentee determines that it is not in
its continued interest, commercial or  otherwise, to "maintain" its patent, it may, without jeopardising
its host Member's compliance with its TRIPS obligations, cease to pay those fees and so trigger the
deemed expiry of its patent before it TRIPS term has run.  Similarly, it can, within statutory limits,control when its period of effective protection will commence in relation to the date it chooses to file
its application.
Q.26 You refer to potential statutory delays in paragraphs 43 and 44 of your first oral
statement.  Are these the type of delays which are to be minimized under Article 62.2?  If so,how is it reasonable to require an applicant to  rely on tactics entailing exploitation of such
delays to obtain a term of protection consistent with Article 33 when they are discouraged by
Article 62.2 and 62.4?
In Canada's view the answer to the first branch of this question is: no.  The delays permitted
under Canadian patent legislation are delays that are designed to ensure that, from the users point of
view, the administration of the patent-granting system is fair, equitable, non-arbitrary and does not
impose the "unreasonable time-limits" referred to in paragraph 2 of Article 41.
The statutory provisions at issue are in essence rules which allow an applicant for a benefit
granted by the State to pursue its application and arrange its affairs in relation to that application in
accordance with its own best interests, perceived or real.WT/DS170/R
Page 122
From this "own best interest" perspective, it is important in Canada's view to bear in mind that
under Canadian law any patent applicant whose perceived "own best interest" was or would be to
accelerate the processing of its application has, within its own control and power, the capacity to
request the acceleration of its patent application.19
Against the background of the foregoing Canada would suggest that there is nothing improper
or untoward in allowing an applicant for a benefit to  be granted by the State to take advantage of the
rules governing the granting of that benefit.  Governmental benefit programmes and systems are not
unlike the private sector credit system.   Thus, if the creditor or governmental programme allows one
sixty days to settle an account or take some defined step, there is no shame, penalty or allegation of
abuse that can fairly be attached where the account is not paid, or the defined step is not taken, until
the sixtieth day.
Q.27 *Given that, in your first oral statement at paragraph 67, you state that "subject
matter" in Article 70.2 does not refer to patents, but rather to "matter that is protectable by
intellectual property rights", please explain what Article 70.2 means.
Within the context of the TRIPS Agreement "subject matter" would appear to have a "term of
art" meaning as appears from its use in Articles 14.3, 15 heading, 27 heading, 28(1)(a), 28(1)(b), 31,
34, and 44.  (An exceptional use occurs in paragraphs 3 and 4 of Article 40, where the phrase is used
to refer to what is being discussed therein, as oppos ed to the work, mark, indication, industrial design,
invention or layout-design that is subject to intellectual property protection.)
For a full discussion of the meaning to be attached to "subject matter" and the operation and
meaning of paragraph 2 of Article 70, please see the answers to questions 6 and 7.
Q.28 What does Article 70.2 refer to in the phrase "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".  Does it include an invention under patent on the date of application
of the Agreement?
In Canada's view patentable subject matter are qualifying inventions and not the patents
issued to such inventions. For a full discussion of this issue and related matters please refer to the
answers to questions 6 and 7.
                                                     
19 See: Paragraph 11 of the Davies affidavit and paragraph 37 of Canada's First (Written) Submission.WT/DS170/R
Page 123
ATTACHMENT 2.4
REBUTTAL SUBMISSION OF CANADA
(14 January 2000)
I. INTRODUCTION
1. Having considered the representations advanced by the United States of America (US) in its
First Submission filed on November 18, 1999, in its Oral Statement to the Panel at its First Meeting
on December 20, 1999 as well as in its Responses to Questions Posed to the Parties by the Panel and
by Canada filed on January 14, 2000, Canada is confirmed in its view that the US has failed toestablish a prima facie  case that the term of protection provisions of section 45 of Canada's Patent Act
(Act) do not comply with the obligations which the US contends are imposed under Article 33 by
virtue of the transitional provisions of paragraph 2 of Article 70 of the Agreement on Trade-Related
Aspects of Intellectual Property Rights  (variously referred to as: TRIPS, the Agreement or the TRIPS
Agreement).
2. Furthermore, even if the US had established a prima facie  case that the Article 33 obligation
applied to certain section 45 patents by virtue of the transitional provisions of paragraph 2 of
Article 70 , which Canada denies and does not concede, it has either misconstrued or simply ignored
and, therefore, failed to rebut or otherwise discredit Canada 's arguments respecting "equivalency "
and "availability" which render the application of paragraph 2 of Article 70 irrelevant or redundant in
these proceedings.
3. Briefly put those arguments
1 have, without reasoned contradiction, established that:
(a) the guaranteed seventeen years of substantive patent protection extended to the
"exclusive privilege and property rights " conferred by a section 45 patent are
substantively equivalent and comparable to and, therefore, consistent and harmonious
with the substantive patent protection of that privilege and those rights which is
conferred by the variable term of protection available under the term of protectionmeasurement formula defined by the conjoint provisions of Article 33 and paragraph
2 of Article 62 of the TRIPS Agreement; and,
(b) the term of protection available  under section 45 was (and is
2), by virtue of the
statutory procedures and legal practices applicable to the prosecution of Old Act
patent applications, available , without exception and on a sound legal basis, for a
term that, as specified by Article 33, would not end before the expiration of a periodof twenty years counted from the application filing date, notwithstanding that the
formal statutory term under the Old Act is defined to run for seventeen years
measured from the date the patent was issued.
                                                     
1 The arguments are, respectively, elaborated in paragraphs 67 to 83 and 84 to 110 of Canada 's First
(Written) Submission and in paragraphs 12 to 29 and 30 to 59 of Canada 's First Oral Presentation.  They are
also further amplified, where relevant, in many of Canada 's Responses to Questions Posed to the Parties by the
Panel.
2 There are approximately 1,000 Old Act applications still outstanding.  See: Davies Affidavit at
paragraph 23.WT/DS170/R
Page 124
4. The balance of these rebuttal submissions will address certain arguments advanced by the US
in its various submissions to the Panel and demonstrate why the US has failed to establish a prima
facie  case in support of its complaint.
II. THE FAILURE OF THE US COMPLAINT
5. The US complaint is based on two propositions:
(a) its first premise is that by virtue of Article 33 of TRIPS, all WTO Members are
required to provide or grant a term of protection for patents that runs at least until
twenty years after the application filing date;
(b) its second premise is that by virtue of paragraph 2 of Article 70, all patents existing at
the date of application of TRIPS for the Member in question and which were
protected as of that date, are entitled to a term of protection equal to the term
described in Article 33.
As set forth in the paragraphs that follow and as is clear from the evolution of the US submissions and
the points that have been conceded within those submissions, neither premise is accurate.
Accordingly, neither sustains the US complaint.
The Failure of the First Premise - The TRIPS Term is Variable
6. In its initial articulation of this complaint the US alleged that "By its plain terms [Article 33]
obligates all WTO Members to grant  a term of protection for patents that runs at least until twenty
years after the filing date  of the underlying application.".  It went on to allege that "The phrasing of
the provision...also indicates that the twenty year term is a minimum term ....".3  (Bold face  added
for emphasis)
7. It reiterated this position in the second articulation of its complaint where it stated that: "They
[being Articles 33 and 70.2] require Canada to provide a twenty year patent term to all patent
holders."  In support of this proposition the US inaccurately quoted Article 33 as providing that: A
>The term of protection shall not end before the expiration of a period of twenty years counted from
the filing date. ".4
8. To critical effect, this rendition of Article 33 omits the word available  from the specification
or definition of the obligation which, in its authentic version, reads: "The term of protection available
shall not end before the expiration of a period of twenty years counted from the filing date. "5 (Bold
face added for emphasis)
9. The US again advanced the "twenty year minimum term " hypothesis in its third articulation
of its position where, in its answer to the third Question posed to both Parties by the Panel, it
characterized the basic requirement of Article 33 to be "to provide a certain defined minimum term of
protection to rights holders."6
                                                     
3 Paragraph 10 of the First Submission of the United States, at page 3.
4 Paragraph 2 of the Oral Statement of the United States, at page 1.
5  TRIPS, Article 33.
6  Answer 3, Responses of the United States to Questions Posed to the Parties by the Panel.WT/DS170/R
Page 125
10. As the Panel is aware, in Canada 's view Article 33 cannot be read in isolation from other
Articles of the Agreement and, most particularly, cannot be read in isolation from or as ignoring
Article 62, paragraph 2 of which  recognizes  and sanctions  the fact that the term referred to in
Article 33 will be eroded by the operation of reasonable procedures which, inter alia , are
prerequisite to the granting of a patent.7
11. Notwithstanding the US assertion referred to  above in paragraph 10 and notwithstanding that
in paragraph 9 of its Oral Statement, the US contended that "Article 62 has no relevance to this
case...", elsewhere in its responses to the Panel questions it now concedes that, by virtue of the
operation of paragraph 2 of Article 62, "...some loss of term due to pendency is inevitable ..."8 (Bold
face added for emphasis)
12. In making this concession, the US admits that Article 33 does not require  Members "to
provide a certain defined minimum term of protection to rights holders. "
13. Further, where in its answer to paragraph (a) of the Panel 's first question to both Parties, the
US states that "The meaning of unwarranted curtailment cannot be determined in the abstract, and
reasonableness may vary by situation. ", it concedes that not only will the term referred to in
Article 33 be inevitably eroded and thus be less than that twenty year term, but also that the amount of
inevitable erosion will be  variable .
14. A Member 's compliance with the Article 33 obligation cannot, therefore, be determined by a
simple, arithmetic comparison.
15. The US admissions that the term referred to in Article 33 will inevitably be eroded and that
the inevitable erosion will vary in accordance with the circumstances defining the reasonableness of
the procedures referred to in Article 62, jointly and severally admit by necessary implication that thefirst premise advanced in support of the US complaint is fallacious and cannot be sustained in the face
of the unequivocal clarity of the relevant provisions of the Agreement.
The Failure of the First Premise - The TRIPS Term is Available
16. The first premise of the US complaint also fails for the additional reason that it does not take
account of the uncontested fact that under Canadian law and practice respecting Old Act patents, a
term of protection at least equal to (and frequently in excess of) a period of twenty years counted fromthe filing date of an underlying patent application was (and continues to be) available , without either
exception or discrimination, to any Old Act applicant who wished to count and obtain a term of
protection on that basis.
17. As a matter of public record, just over sixty per cent of all such Old Act applicants obtained
or will obtain such equal or superior terms of protec tion. Such terms, therefore, were (or will be), as
                                                     
7 The US would appear to share this view since, in reference to Articles 33, 62.4 and 41.2, it states in
its answer to the 10th question posed by the Panel that: "These obligations of the Agreement must be read
together, not in isolation.  The term of protection required to be provided in Article 33 presupposes reasonable
procedures for the acquisition of patent  rights, such that the requirement of a twenty year term....is not rendered
a practical nullity. "
8 See: Lines 3 and 4 of the US Response to Question 1(b).  See too the US response to Question 10
referred to in footnote 6.  The US had previously noted this "variability", but only in relation to its analysis of
the alleged term-deficiency of section 45 patents, see: Paragraph 3 of its First Submission.WT/DS170/R
Page 126
Article 33 requires, unequivocally available  to any applicant who chose to similarly order their affairs
under section 45 and the other relevant provisions of the Old Act.
18. The US has, by necessary implication, conceded the fact of "availability" where it argues9
that the twenty year and twenty year plus terms th at have been or will be granted under section 45 do
not compensate for the terms that, notwithstanding their substantive equivalency with the effective
patent term protection offered by the conjunctive provisions of Articles 33 and 62, did or do not meet
the twenty year from filing date standard.
19. Similarly, in focussing its allegations of TRIPS non-compliance on the forty per cent of
section 45 applicants who obtained a term of protection which was less than the nominal term referred
to in Article 3310, it concedes by necessary implication that the twenty year or twenty year plus term
was nevertheless "available" as demonstrated by the results obtained by the remaining sixty per cent
of all section 45 applicants.
20. In other words, since there is nothing in the Canadian "availability" measures which
discriminates between applicants or applications, what  was obtained in respect of sixty per cent of the
section 45 applications was "available" for one hundred per cent of the section 45 applications.
21. Notwithstanding these admissions by necessary implication, the US has subsequently sought
to impugn the propriety or TRIPS relevance of the Canadian measures which made the twenty year
term from application filing date available to any Old Act applicant who sought to view and obtain its
protection on that basis.11
22. Thus in its answer to the second question posed by the Panel to both Parties, the US is criticalof the provisions of Canadian law that allowed patent applicants to delay both the commencement
date and, as a result, the end date of their term of full, substantive patent protection.  It condemns
those measures as being "unnecessarily complicated procedures ".
23. Canada disagrees.  The procedures at issue are, as described in Canada 's answer to the
Panel's Question 26, designed to ensure that, from an applicant 's point of view, the rules of the
patent-granting system would, as contemplated  and required by Articles 41.2 and 62.4, be >fair,
equitable, non-arbitrary and free of "unreasonable time limits ".
24. As admitted in the US answer to the third question posed by Canada, A...US patent law ...did
and does contain provisions similar to Section 30.2 ( sic) of Canada 's Old Act.  (In the description
which follows, the US answer makes clear that its sy stem also contains a rule similar to the rule in
Section 73 of the Old Act but for the fact that, unlike the Canadian provisions which operate as of
right, the US provisions are subject to the Commissioner 's discretion.)
25. Canada has tabled the applicable procedural rules as Exhibit 16.  Contrary to the allegations
in paragraphs 6 and 7 of the First Oral Statement of the US, the applicable rules speak to legal rights
albeit one is, like all the analogous rules in US law, subject to the discretion of the Commissioner ofPatents and they have, at all material times been available in a written, published form as integral
parts of the Old Act and Rules.
                                                     
9 See: Paragraph 14 of the First Submission of the US.
10 See: Paragraph 4 of the First Submission of the US.
11 See: Paragraphs 6 and 7 of the Oral Statement of  the US as well as the US answer to the second
question posed by the Panel to both Parties.WT/DS170/R
Page 127
26. The procedural stipulations and rules, if awkwardly drafted, are simple and straightforward.
At their most complicated, they require as does US law the applicant-petitioner to satisfy the
Commissioner of Patents that its failure to prosecute its application within the specified time "was not
reasonably avoidable ".  Why this requirement might be "unnecessarily complicated " for an applicant
who would have first hand knowledge of the reasons  why it could not complete its prosecution within
the specified time, is unclear to Canada.
27. Furthermore, the US alleges, in its answer to the Panel 's second question, that >Canada
required applicants to follow such "unnecessarily complicated procedures to obtain unwarranted
delays in the grant of their patents, i.e. avoidable delays justified for no purpose other than mere
delay."
28. Canada denies this speculative allegation.  Further, contrary to the companion allegations set
out in the same answer that Canada "imposed" such delays on applicants, Canada reiterates the fact
that the procedural rules in question were designed to ensure fairness and equity in the granting
process.  As such they established rules that offered relief from the otherwise arbitrary time limits set
out in the statute or regulations for the completion of certain steps in the patent application process.
They were available  to, not "imposed" on, applicants.  It is inescapable from the face of the rules
themselves that they were, at the instance that is, on the "petition" or "application" of the applicant,
available to any applicant wishing to obtai n the relief provided for by the rules.
29. Moreover, although designed and enacted in the interests of fairness and equity, the rules
could also be used to obtain a delay in the commencement and end dates of full patent protection inthe interests of practical commercial or regulato ry reasons which might supplant the incentive to
obtain patent protection as soon as possible.
12
30. An excellent example of one of the reasons an applicant might wish to shift its patent
protection forward in time is described by the Chairman of the 10 + 10 Meeting when he reported on
the concerns some TRIPS negotiators had about "...the normal period of delay between the filing of a
pharmaceutical patent application and the obtaining of approval for marketing the pharmaceutical...
[being]...something over 10 years. "13
31. Clearly, where the start and end date of the full patent protection to be conferred on a
pharmaceutical invention can be moved forward in time to more closely coincide with the date of
regulatory approval for the marketing of the product, the forward shift in time will reduce the erosion
of the exclusive patent rights, not to mention their value, which would otherwise result from the
regulatory approval process.
32. In view of the foregoing, Canada submits that  neither the propriety nor the relevance of the
Canadian rules and practices respecting relieving delays in the patent application prosecution process
can be dismissed as being improper in or irrelevant to an analysis of the availability of a twenty year
from filing date term of protection under section 45 of the Old Act.  The fact that similar rules exist
under US patent legislation argues that it is not open to the US to impugn their propriety.  The fact
that they can and did operate to make a twenty year from filing date term available under a term fromgrant system confirms that they are not irrelevant.
                                                     
12 See: Canada 's answers to Panel Questions 5 and 19.
13 See: US Exhibit No. 11 at page 4.WT/DS170/R
Page 128
33. In the result under this, the "availability", branch of the analysis respecting the failure of the
first premise of the US complaint, it can be shown to fail for two reasons.  It fails first because it has,
by necessary implication, admitted that a twenty  year from filing date term of protection was
available  under the Canadian law and practice relating to section 45 patents.
34. It fails second because it has not established that the procedural mechanisms which ensured
availability  are improper or irrelevant either: to the assessment of Canada 's compliance with its
TRIPS obligations; or, to the related determination as to whether or not, under the test articulated by
the Appellate Body in the India B Patent Protection  case14, those mechanisms provided a "sound
legal basis" for the availability  of the term of protection here at issue.
35. In this latter regard Canada notes that in the India B Patent Protection  case the Appellate
Body endorsed a Member 's Article 1.1 freedom to determine the appropriate method of
implementing its TRIPS obligations within its own legal system and practice.15  However it also went
on to decide that, if implementation was by "practice" it had to have a "sound legal basis " which
"would survive legal challenge ".16
36. Canada submits that its "availability" measures, whether grounded in the formal legal rules
disclosed in Exhibit 16 respecting the Old Act or in the informal practices of examiners referred to in
Exhibit 817 that existed in the shadow of those formal rules, are consistent with this standard.
37. Canada makes this rebuttal submission on the basis that all of the delays that may have been
granted pursuant to either the formal or informal rules although once, are no longer, exposed to legal
challenge.
38. This is so because, first, the period roughly being October 1979 to April 1992 in which such
decisions could have had any impact on the term of  protection here at issue has long since expired.
Second it is so because, as emerges clearly from the undisputed evidence in the Davies affidavit, no
request for delay was ever refused.  And, third, it is so because the procedural rules permitting
challenges of such decisions, require that such challenges be filed within thirty days of the decision
complained of becoming known by the party directly affected by the decision.18
39. In the result, it is unambiguously the case that any applicant in a position to request any of theprocedural delays at issue either obtained the delay requested, or, chose not to take advantage of its
position to request a delay.  Consequently, there are no longer any such informal "practice" decisions
that would, under the India - Patent Protection test, be exposed to reversal under a legal challenge.
40. There are no reported cases in respect of legal challenges brought against the Commissioner
on the basis of a formal statutory decision respecting the delays here at issue.
41. In conclusion, Canada submits that, as explained in its answer to the Panel 's Question 22,
where the first premise of the US complaint fails  whether because TRIPS does not prescribe a fixed
term or whether because Canadian law complied with the TRIPS standard  the second premise of the
US complaint becomes irrelevant or redundant.
                                                     
14 India - Patent Protection For Pharmaceutical And Agricultural Chemical Products
(AB-1997-5), (WT/DS50/AB/R) (December 19, 1997) at paragraphs 70, 71.
15 India - Patent Protection , at paragraph 59.
16 India - Patent Protection , at paragraph 70.
17 Affidavit of Peter J. Davies, Chairman of the Patent Appeal Board of the Canadian Patent Office,
paragraph 10.
18 Federal Court Act , R.S.C 1985, c. F-7, subsection 18.1(2).  Reproduced as Exhibit No. 22.WT/DS170/R
Page 129
The Failure of the Second Premise
42. Ignoring, for the time being, its irrelevance, the second premise on which the US complaint is
advanced presupposes that paragraph 2 of Article 70 applies to all patents existing at the date of
application of the TRIPS Agreement for the Member in question and which were protected as of that
date, and that all such patents are entitled to a term of protection equal to the term described in
Article 33.
43. In its initial iteration of this proposition in paragraph 11 of its First Submission, the US
maintained that in "its ordinary meaning " Article 70.2 gave "rise to obligations including the
obligation to grant a patent term of at least twenty years from the date of filing in respect of all patents
("subject-matter ") existing... " on the date of the application of the TRIPS Agreement to, inter alia ,
Canada.
44. It made no reference to any other provision of Article 70.
45. In paragraph 2 of its Oral Statement the US recast this second premise and said that:
"Articles 33 and 70.2 are not complicated.  They require Canada to provide a twenty year term to all
patent holders. "
46. It went on to explain in paragraph 10 of that Statement that the "...text of Article 70.2 is key.
... [it] states that except as otherwise provided in the Agreement, TRIPS gives rise to obligations in
respect of all subject matter existing at the date of application of this Agreement. "  (Underlining in
the original)  Immediately thereafter it contended that: "A patent is a type of subject matter. ".  It next
drew the conclusion that: "Patents that existed at the date of Application of the Agreement thus fall
within the scope of Article 70.2."
The failure of the "subject matter " thesis
47. As the Panel is aware, Canada took issue19 with the US equation of "patents", being the
vehicles of protection, with "subject-matter ", being the object work, mark, design, invention etc. of
protection.  As appears from the US answers to Pane l Questions 7 and 13, it has now modified, if not
resiled from, its earlier views and agrees with Canada that: "... subject matter as used in the TRIPS
Agreement generally refers to the matter that is or can be entitled to intellectual property protection.
Indeed, this is exactly how Article 70.2 utilizes the term subject matter. "
48. While the US concludes that there is now "no substantive difference between the U.S. and
Canadian views of the term subject matter. ", Canada does not agree with the US further proposition
in which it merges the concepts of "patent", being the vehicle of protection, and "subject-matter ",
being the object of protection, back together again when it says that: "...both Parties seem to agree
that patented inventions are subject matter. "
49. Canada does not agree with this formulation for two reasons.  First it involves adding words
and concepts  to the TRIPS treaty and as such is to be condemned for the reasons given in the ruling
of the Appellate Body in the India B Patent Protection  case to the effect that:
                                                     
19 See: Paragraphs 66 and 67 of Canada 's First (Written) Submission.WT/DS170/R
Page 130
The duty of a treaty interpreter is to examine th e words of the treaty to determine the intention
of the parties.  This should be done in accordance with the principles of treaty interpretation
set out in Article 31 of the Vienna Convention .  But these principles of interpretation neither
require nor condone the imputation into the treaty of words that are not there or the
importation into a treaty of concepts that were not intended.20
50. Second, Canada does not agree with the formulation because, within the structure of
Article 70.2, "subject-matter " and "protection" or the "vehicle of protection " are segregated to
distinguish the two ideas.  To merge them togeth er introduces redundancy into the Article 70.2 text by
changing the Article 's reference to "...subject matter existing...and which is protected... "; into
patented subject matter...which is protected  which, of course, is the equivalent of saying protected
subject matter...which is protected .
51. The negotiator-drafters of the TRIPS Agreement could not have intended such an obvious
redundancy.
52. The distinction between the concepts of "subject-matter " and "protection" or "vehicle of
protection" is not insignificant.  It is not insignificant because the "subject-matter " of protection may
be defined by certain attributes and, when protected, attract certain rights and obligations; whereas,
the "vehicle of protection " may be defined by different attributes and may attract or carry with it a
different set of rights and obligations.
53. The distinction is reflected in the TRIPS patent provisions inasmuch as: Article 27 defines
what "subject-matter " is "patentable" or "protectable"; Article 28 defines the rights to be conferred
and protected by a patent; Article 29 defines an applicant 's obligation to disclose its invention as part
of the patent bargain; and, Article 33 defines a variable term of protection during which the rights
conferred will endure.
54. The same distinction is reflected in the municipal patent law of Canada where: the definition
of "invention" in section 2 combined with sections 27, 28.2 and 28.3 define what may be
"patentable" or "protectable"; the rights conferred and to be protected are defined in section 42;
sections 10 and 27 require the disclosure of the invention; while, the duration of the protection to be
granted to those meeting the requirements of the Act is defined by section 44 or 45, depending on the
filing date of the application.21
55. Thus, in the municipal law of Canada, as in the international law of TRIPS, the patent
conveys or "grants" a bundle of rights, exclusive or otherwise; and the act and words of "grant"
establish the term of the duration of the rights granted.22  In other words, the term of protection flows,
under the direction of the statute, from the "grant" and not from the "patent" or the "subject-
matter" which it protects with exclusive privilege and property rights.
56. Were this distinction not significant, then the drafters of both the municipal law of Canada
and of the international law of TRIPS would have merged or melded the term-defining provision into
the rights-granting provisions, such that patents w ould convey or grant both the bundle of rights and
the term of protection.  That the drafters did not do so, speaks with persuasive authority.
                                                     
20 India - Patent Protection,  at pages 17-18.
21 See: Exhibit No. 23.
22 See: Section 42 of the Patent Act, reproduced in Exhibit No 23; and, the words of grant used by the
Canadian Patent Office which first establish the term and second describe the scope of the rights granted by the
patent, reproduced as Exhibit No. 24.WT/DS170/R
Page 131
57. In the presence of these structural and substantive distinctions, both the initial US position of
equating "subject-matter " with "patents" and its subsequent position of re-merging the two concepts
in the compound phrase "patented subject-matter " are revealed as being critical to its case.  Thus its
failure to sustain either its initial "equation" or its subsequent "re-merging" of the two concepts is
fatal to its second premise.  And, of course, to its case.
The failure of the "acts" thesis
58. At paragraph 122 of its First (Written) Submission Canada called attention to the fact, noted
above at paragraph 45, that the US, in advancing its Article 70.2 premise, had failed to take any
account of the non-retroactivity rule in respect of pre-application date "acts" set out in paragraph 1 of
Article 70.  In this connection it should be noted that the US has conceded that Article 28 of the
Vienna Convention is part of customary international law and that Article 70.1 merely restates the
treaty rule 23.
59. The US responded to this observation in paragraph 13 of its Oral Statement, saying that
"Article 70.1 of TRIPS did not mandate a different result " from the TRIPS implementation conduct
of other Members which it had adduced as evidence it chose to identify as "subsequent practice "
evidence.24
60. After quoting the substance of the Article 70.1 non-retroactivity rule, the US states that it
agrees with Canada that the word "acts" in the Article "refers to, inter alia , the acts Canada identifies
in paragraph 116 of its first submission, as well as such acts as " those of customs officials
administering import control policies.
61. The US then illustrates25 its view of the operation of Article 70.1 by giving an example of
where and how it would apply.  From this it concludes that "Article 70.1 simply says that in
implementing TRIPS, a country does not have to go back and provide a remedy against [a] person for
his 1993 acts. "  Notwithstanding that the US agrees that "acts" refers to all the "things done" i.e.
"acts" described in paragraph 116 of Canada 's First (Written) Submission, the example it gives is
limited to demonstrating how it would operate in respect of pre-application date acts of infringement
or potential infringement.
62. The example therefore does not explain how Article 70.1 would operate in respect of the
other types of "acts" at issue.  Thus it says nothing about the Article 's operation in respect of the
                                                     
23 See: US answers to Questions 6(a) and (b).
24 See: Paragraphs 69 to 79 of Canada 's First Oral Presentation for Canada 's views on the value and
weight of this alleged "subsequent practice " evidence.  In its answers to Panel Questions 4 and 14 the US has
responded to Canada 's concerns respecting the value of the evidence in question, saying that one of Canada 's
criticisms: "..had no relevance ".  Parenthetically, Canada would note that the US suggestion that Canada 's
points respecting the fact that several, if not most, of the Members amending their laws to implement TRIPS
standards had "first to file" systems which granted terms of protection in respect of "first to file" applications
which ran from the application filing date and were "arithmetically " less than the twenty year standard
prescribed by TRIPS, "have no relevance " is obscure. How such unambiguous deficiencies in "first to file"
terms of protection might be "of no relevance " to whether or not those Members ' obvious need to amend their
laws to be TRIPS compliant had any subsequent value to assessing Canada 's need to amend its "first to invent,
term from grant " system, is unclear to Canada.
25 See: Paragraph 14 of its Oral Statement.WT/DS170/R
Page 132
"act" of a patent applicant filing an application.  Similarly, it says nothing about the Article 's
operation in respect of the subsequent "act" of a patent authority issuing a patent.
63. Since the latter two types of "act" are the types that Canada has, in its defense of this
complaint, put in issue, it is incumbent on the US to  go forward with evidence or, at least, interpretive
theory to explain why Article 70.1 would operate any differently from its example when or where a
pre-application date administrative act of filing or grant was at issue.  A failure to discharge thisburden, would threaten its capacity to make out a prima facie  case.  And, of course, threaten its
prospect of success in its complaint.
64. In its answer to the Panel 's eleventh question the US was forced to respond to this very issue.
In the course of its answer to this question, the US conceded that "By its plain meaning, "acts"
would include the administrative act of granting a patent by a patent office. "
65. It then explained that: "The acts of Canada 's Patent Office prior to 1996 are not at issue. "
Without saying anything about whether or not "acts" of applicants for Canadian patents were or were
not at issue, the US answer went on, in an obvious reference back to its hypothesis that "subject-
matter" means "patented invention ", to explain that: "Canada's violation....stems from its failure,
...to extend the term of protection for existing patented inventions  to at least twenty years from
filing.  This violation is unrelated to any pre-96 "act", but is related only to the subject matter
(protected inventions ) that existed on 1-1-96. @  (Bold face added for emphasis)
66. Canada submits that this theory or explanation of the US complaint is deficient.  It is so for
two reasons.  First for the reasons set forth in paragraphs 49 to 58 of this rebuttal, Canada does not
agree that a case can be made for the proposition that "subject-matter " means, or includes in its
meaning, "patented or protected inventions ".
67. Accordingly, the distinctions elaborated in th e referenced paragraphs would operate to detach
the term of protection given by the act of the grant of the patent from the exclusive and other rights
conferred by the patent itself.  "Acts" of grant cannot be viewed as continuing acts that attract the
prospective patent-term extensions that the US alleges are due to rights holders possessed of patents
that existed on the date of application of the Agreement and, in the view of the US, were
"term-deficient ".
68. The 
"act" of grant is decisive and, subject to judicial review, conclusive unlike the
consequential rights it gives rise to, which continue, subject to the vagaries of maintenance fee
payments, forfeiture, revocation and cancellation, for a defined but variable term.  The "act" of grant
is a final "act" and is no more a continuing act than life, subject to all its vagaries, is a continuing act
of birth.
69. A pre-application date "act" of grant does not therefore exist, nor is it "protected", except by
paragraph 1 of Article 70, on the date of application of the Agreement for the Member in whose
territory the "act" took place.
70. The second reason why the US theory arguing that "acts" of grant are subject to the
obligations of paragraph 2 of Article 70 respecting existing "subject-matter " is deficient is that its
"patented or protected invention " theory takes no account of the fact that the "act" of grant is
consequential to the "act" of filing an application.
71. In this respect it is significant that since the obligation in Article 33 is triggered by the
applicant's act of filing a patent application, the obligation to provide the term of protection referredWT/DS170/R
Page 133
to in that Article is clearly an obligation "in respect of " the "acts" of filing a patent application or
granting a patent and, therefore, falls squarely within the meaning and scope of Article 70.1.
72. Article 33 specifies that the term of protection that it requires is "counted from the filing
date" of the application.  The "act" of filing an application therefore is the trigger which starts the
clock of protection.  Like the "act" of grant, the "act" of filing an application is, within a term from
filing system, a decisive, conclusive, and final act.
73. Thus just like the pre-application "act" of grant, the pre-application "act" of filing does not
have a continuing existence, nor is it protected except by paragraph 1 of Article 70 Bon the date of
application of the Agreement for the Member in whose territory the "act" of filing took place.
74. To complete this rebuttal discussion of the US second premise, Canada would first reiterate
its view that where the US first premise fails, its second premise becomes irrelevant.
75. Canada would then note that the US has, within the context of the non-retroactivity rule of
Article 70.1, made two telling admissions: first, it admits that the word "acts" in the Article includes
the "acts" of officials in the Patent Office granting patents; and second, it admits that a pre-1996
"act" of grant would not give rise to obligations under the TRIPS Agreement.  The initial version of
the US= second premise fails in the face of these admissions.
76. However in admitting that "acts" of grant do not give rise to TRIPS obligations the US
refocuses its complaint on the fact that Canada had not, as of January 1996, and has not since
extended the terms of protection of allegedly term-deficient section 45 patents that continued to exist
on and after that threshold date.
77. In refocusing its premise the US reintroduces its concept that "subject-matter ", as used in
Article 70.2 includes the US compound notion of "patented or protected subject-matter ".  In the
result the refocused thesis gives rise to the same interpretive flaws that lead to the failure of the
"subject-matter " thesis.  Accordingly, the refocused thesis fails and it fails for the same reasons.
III. CONCLUSION
78. This case is not an "exceedingly simple " one as initially contended by the US.  However, in
light of the undisputed evidentiary record, the subsequent admissions, refinements and changes in the
US theory, it lends itself to a simple solution.  A solution which in Canada's submission, the Panel is
obliged to adopt.  That solution is to find:  that there is no case to answer.
79. As demonstrated above, the US now accepts that Article 33 of TRIPS, like its own
implementing legislation, establishes a variable period of patent protection "beginning on the date the
patent issues and ending 20 years from the date on which the application for the patent was filed ".26
80. Canada has also demonstrated that the normal pe riod of patent protection in Canada under its
comparable, TRIPS-compliant section 44 patent term regime is 15 years, while its section 45 patent
term regime confers a fixed term of 17 years.  This in Canada 's submission is, as a matter of fact,
equivalent or superior to the variable term obligation agreed to in Articles 33 and 62 of TRIPS.
                                                     
26 United States Code Title 35  s 154 (2).  Reproduced as Exhibit No. 25.WT/DS170/R
Page 134
81. Similarly, the US has conceded that sixty per cent of all section 45 patent applicants obtained
a period of patent protection in excess of twenty years measured from the date of filing of their patent
applications.  The evidence that any applicant could take advantage of the various formal and
informal delays provided under Canadian law and practice is uncontested.
82. There is no evidence that any Canadian law purported to restrict or limit the term of patent
protection measured from the filing date.  Indeed th e evidence is to the contrary.  Accordingly, the
TRIPS required term as a matter of undisputed fact, was available for the asking, to any and all
applicants during the period they were prosecuting their applications for patents.  That "availability"
is all that TRIPS Article 33 requires.
83. Finally, the US has conceded that "acts" as used in TRIPS Article 70.1 includes the act of
granting a patent by a patent office.  Issuing a patent for a fixed term is a final act.  As demonstrated,
section 45 patents are issued by the Commissioner of Patents on a specified date and are issued "for a
term which expires seventeen years from the date on which the patent is granted and issues in
Canada".27  The patent itself, once granted, is the vehicle which conveys the exclusive privileges and
property rights associated with a patent.
84. The US has failed to establish that a "patent" is "subject-matter " within the meaning of
TRIPS and yet now, in January 2000, it still argues that patented subject matter became entitled to an
extended term of protection on January 1, 1996, the date of the application of TRIPS for Canada.
This, notwithstanding that the "act" of grant, which the US concedes is within the scope of
Article 70.1 is, on the evidence, an act of grant for a fixed term.  In Canada 's submission this is a
final act which occurred before the application of the Agreement and, by virtue of Article 70.1, no
obligations arise under the Agreement in respect of that act.
IV. DISPOSITION REQUESTED
85. Canada, therefore respectfully asks that this complaint of the US be dismissed by the Panel as
being unfounded in fact, and that, the Panel find that Canada 's impugned section 45 measure is, in
any event and on all the evidence, compliant with its TRIPS obligations.
                                                     
27 See: Exhibit No. 24.WT/DS170/R
Page 135
ATTACHMENT 2.5
ORAL STATEMENT OF CANADA AT THE SECOND MEETING
WITH THE PANEL
(25 January 2000)
Table of Contents
I. INTRODUCTION   ………………………………………………………………………136
II. FIRST ARGUMENT: THE SCOPE OF THE OBLIGATION
IN ARTICLE 33  …………………………………………………………………………136
III. SECOND ARGUMENT:  CANADA’S “EQUIVALENCY”
ARGUMENT AND EVIDENCE  ……………………………………………………….137
IV. THIRD ARGUMENT: CANADA’S “AVAILABILITY” ARGUMENT
AND EVIDENCE ………………………………………………………………………..142
V. FOURTH ARGUMENT: ARTICLE 70 ……………………………………………….144
VI. FIFTH ARGUMENT: SUBJECT MATTER …………………………………………145
VII. CONCLUSION  …………………………………………………………………………147
VIII DISPOSITION REQUESTED …………………………………………………………148WT/DS170/R
Page 136
I. INTRODUCTION
1. Canada is pleased to have this opportunity to present its rebuttal argument this morning.
Canada, relies on its earlier submissions and answers to questions.  It takes issue, however, with the
evolving theories the US has been developing in support of its complaint which, in Canada’ssubmission, are founded on false premises and ad hominem  arguments.  That is to say, the US case is
based on what the US would prefer the TRIPS Agreement to require, rather than the actual obligations
set out in the Agreement that all Members have adopted.
2. Rather than attempt a point by point critique of the US arguments, in rebuttal Canada will
present five arguments in answer to the US case .  We will address the scope of the obligation under
Article 33 and explain why our measure is consistent both in terms of equivalence and availability.Canada will then explain why its section 45 patent term provisions are not subject to the Agreement.
It will conclude by explaining that since neither patents nor terms of protection are “subject matter”
within the meaning of TRIPS, they do not, where either existed on the application date of the
Agreement, attract or otherwise give rise to obligations under paragraph 2 of Article 70 of the
Agreement.
II. THE SCOPE OF THE OBLIGATION IN ARTICLE 33
3. The US persistently and inaccurately seeks to impose an obligation under Article 33 to
provide a term of patent protection of twenty years as it did for example: in paragraph 2 of its first
Oral Statement; in its answer to Question 10 of the Panel; and, in a modified, but still inaccurate form,where it posits that the Agreement requires a patent  term of twenty years measured from the filing
date, as it has in the first paragraphs of both its First and Second Submissions.
4. No matter how often these mischaracterizations are repeated, they cannot change or amend
the actual requirement created by the words used in Article 33.  The object of the Article is not atwenty year term of patent protection.  Article 33 does not say that.  The US case hinges on reading
Article 33 as if the word available  is not there
1.  But it is.
5. The US case hinges too on the US applying or interpreting the instrument or formula of
measurement, namely, “...a period of twenty years counted from the filing date...” as if it were itself
the definition of the term of patent protection.  But it is not.
6. This is made manifestly clear by paragraph 2 of Article 62 which, as Canada has explained2
and the US has conceded,3 recognizes that the period referred to in Article 33 will be “curtailed” by
reasonable procedures that are prerequisite to the granting of a patent.  This fact is unambiguously
confirmed by the US municipal law respecting the term of protection where it specifies that the:
                                                     
1 See, for instance, paragraph 2 of the US’ Oral Statement where it omits the word “available” from its
quotation of Article 33.   See too the subtitle of II A in the US’ Rebuttal Submission and the discussion which
follows where, in the course of insisting on a plain language interpretation and application of Article 33, the USavoids any reference to the word “available”.  (It does however quote Article 33 accurately in footnote 5 but in
so doing offers no explanation of its meaning.)
2 See: Paragraphs 67 to 75 of Canada’s First (Writte n) Submission and see, too, Canada’s responses to
Panel Questions 1 and 3.
3 See: the US response to Panel Question 1(b) where it states: “...some loss of term due to pendency is
inevitable ...”.(Bold face  added for emphasis)WT/DS170/R
Page 137
...grant shall be for a term beginning on the date the patent
issues and ending 20 years from the date on which the
application for the patent was filed...4
7. As the Panel is aware, Article 33 in fact  provides that ‘the term of protection “ available ” shall
not end before’ the twenty year period it specifies; and, paragraph 2 of Article 62 in fact recognizes
that the period referred to in Article 33 will be curtailed  such that the substantive term of protection5
will inevitably be less than that period.
8. In short, Article 33 requires that the “term of protection”–whatever its exact length–be
available  within the twenty year period it specifies.  And that–the obligation to make the term
available –is the only obligation or requirement of the Article.
9. As the Agreement does not, on its plain wording, impose the obligation or requirement upon
which the US advances its claim, the US complaint must fail.  It is not now open, in the middle of the
process, to the US to formulate a fresh or different complaint.  Nor should it be the role of this Panel
to undertake a general inquiry into Canada’s various measures respecting the term of protection todetermine if they are consistent with its TRIPS obligations.
10. This is a dispute settlement proceeding respecting a defined complaint, not a general audit of
Canada’s compliance with its TRIPS obligations respecting the term of protection.  And within that
proceeding the US complaint should stand or fall on its own merit.
III. CANADA’S "EQUIVALENCY" ARGUMENT AND EVIDENCE
11. Canada observed in its Second Submission
6 that the US has failed to confront Canada’s
arguments directly.  Instead the US has often resorted to speculative statements7 and to providing
extreme hypothetical examples such as a patent term of 1 day from grant8.
12. Such resort to straw dog argumentation is of no assistance in assessing the actual compliance
of Canada’s section 45 measure with its TRIPS obligations.  In its Rebuttal Submission, the US
continues to misstate and mischaracterize Canada’s arguments, and to confuse the concepts of
“equivalency” and “availability” and the undisputed facts which support each.9
13. Contrary to the suggestion in paragraph 12 of  the US’ Rebuttal Submission, Canada has not
shifted its position in respect of the “equivalency” argument.  In contrast, all Canada has done in its
                                                     
4 See: Canada Exhibit No. 25, being Title 35 Patent s, paragraph 154(a)(2).  Canada notes that because
there will, in such a system, always be a temporal disjunction between the date of filing and the date of grant,
the system guarantees that the amount of “effective” protection available will never equal the maximum 20 year
period that the US suggests is required of Canadian law.
5 As the US notes at paragraph 4 of its Rebuttal Submission, Canada frequently refers to the substantive
term of protection as the “effective” term of protection or the term of protection for the “exclusive privilege andproperty rights” conferred by a patent.
6 See, for instance, paragraph 2
7 See, for example, the US contention that ‘Canad a required applicants to follow an “unnecessarily
complicated” procedure’ elaborated, without evidence of any such requirement, in the US response to PanelQuestion 2.  The procedures were “available” not “imposed”.  See also Canada’s response to Panel Question 26.
8 See, for instance, the self styled “extreme” hypothesis set out in the US’ response to the Panel’s
Question 10.
9 See: paragraph 10 of the US’ Rebuttal Submission.WT/DS170/R
Page 138
answer to the Panel’s Question 21 is to refer to the  same  pendency statistics10 used to calculate the
average “effective” term of a section 44 patent, to make the same , not some ‘slightly shifted’
“equivalency” point.
14. That point is that, whatever the average pendency period may be, in nine cases out of ten,
section 4411 patents receive the same or less “effective” protection than section 45 patents receive.
And the two systems therefore generate “equivalent” results when examined on the basis of the
duration of their respective protection of the “exclusive privilege and property rights” that are
conferred by a patent once it has actually been issued .12
15. Nor does Canada rely on an “impermissible averaging methodology”.13  Canada does not
average trade concessions or obligations such that “on average” it meets its National Treatmentobligations as was at issue in the Section 337  case that the US cites in support of its criticisms of
averaging.  In any event, the legal principles in that case were derived from a text, namely
Article III:4 of GATT 1994, which is completely different from the text under consideration here,
namely TRIPS Article 33.
16. The US has put the compliance of Canada’s section 45 fixed-term -from-grant system with
the TRIPS Article 33 variable-term -from-filing system at issue.  In the course of doing so, the US
concedes
14 that the latter system results in a term of protection which, by virtue of the operation of the
granting procedures sanctioned by Article 62 of TRIPS, is inevitably and variably  less than the
twenty year period referred to in Article 33.  In this ‘apples and oranges’ circumstance the US offersno theory of how the two methods of establishi ng the term of protection may be analytically
compared to one another.  Its case requires that it do so.
17. Canada, in contrast, presents a defence which comprises of analysing and comparing the
period of “effective” protection available under the two systems. This is a logical, entirely reasonable,TRIPS-consistent approach to the issue.  It is so because, as clearly set out in the recitals
“...[E]ffective and adequate protection of intellectual property rights...” are the ultimate objectives of
the TRIPS Agreement.
15  Canada made this point in paragraph 69 of it First Submission.  The US has
never challenged it.
18. In the course of making its analysis Canada had several options for comparing terms of
“effective” protection.  It could, for example, have chosen to look at the lower extreme of the variableTRIPS system–the one day term suggested by the US
16.  Similarly it could have looked at the upper
limit of the variable system–the full twenty year term that the US concedes will never occur.17  As
noted in its response to the Panel’s Question 21, Canada does not believe that it is analytically
appropriate to make comparisons based on extreme, or exceptional, results that may only be achieved
in unlikely or impossible circumstances.
                                                     
10 Affidavit of Peter J. Davies, Chairman of the Patent Appeal Board of the Canadian Patent Office,
Exhibit F.
11 The US appears to accept that section 44 pate nts are clearly TRIPS compliant: see paragraph 2,
Factual Background, of the First (Written) Submission of the US.
12 Canada notes that, in its Rebuttal Submission, the US has not taken up Canada’s invitation, extended
during the course of the first meeting with the Panel, to put its own pendency statistics in evidence in theseproceedings.
13 See: Paragraph 5 of the Oral Statement of the US  and the subtitle to Section II B of its Rebuttal
Submission.
14 See: The US response to the Panel’s Questions 1(a) and (b).
15 See: the opening or “Desiring” recital to the Agreement.
16 See: the US response to Panel Question 10.
17 See: the US response to Panel Question 1(b) and its “...some loss of term due to pendency is
inevitable...” statement.WT/DS170/R
Page 139
19. Canada therefore turned to look at alternative analytical techniques or tools for judging the
equivalency between the fixed-term-from-grant and the variable-term-from-filing systems.  Given that
a fixed-term-from-grant system always defines a term of “effective” protection, Canada’s inquiry
focussed on techniques or tools that could measure the “effective” protection available under variableterm systems. Therefore, it looked at the “mean” “effective” term in a variable system.  It looked at
the “modal” “effective” term in a variable system.  It looked at the “average” “effective” term in a
variable system.  And it looked at the “probable” “effective” term in the variable system.
20. The first three tools all produced similar results and showed a “normal” pendency period of
approximately five years resulting, of course, in an “effective” term of protection of approximately
fifteen years.  The fourth tool showed, as noted in paragraph 14 of this submission, that in nine casesout of ten, a section 44 applicant obtained an “effective” term of seventeen years or less.
21. Thus all of these analytical techniques point to the same conclusion: where the “normal” term
of “effective” protection available under a variable-term  system is, on a statistically sound basis,
equal to or less than the “effective” protection guaranteed under a fixed-term  system, the two systems
can fairly be said to be, and are, equivalent in providing the “...effective and adequate protection of
intellectual property rights...”
18–in this case, patent rights–that are at the heart of the TRIPS
Agreement.
22. Notwithstanding the confusing characterizations put forward in paragraphs 6 and 7 of the US’
Oral Statement, Canada has argued consistently that the fixed and guaranteed term  of protection
provided to section 45 patents is equivalent or superior to the variable term  which results from the
operation of Articles 33 and 62 and which is normally shorter and, on average, has been 15 years in
Canada.
23. US municipal legislation supports this reasoning.  Canada’s Exhibit 25 reproduces the patent
term provisions of the current US Title 35 Patent legislation.  As also quoted above19 the provisions
stipulate that:
...such grant shall be for a term beginning on the date the patent
issues and ending 20 years from the date on which the application for
the patent was filed in the United States.
24. To maintain its argument, the US must deny its own law.  The period of “patent protection”
or, as Canada also refers to it, the period of “effective protection” does not start until the patent issues
and it inevitably runs for a variable period that is shorter than the twenty years referred to in the US
legislation.  Of course, this result might change if the variable-term system in place in the US, weremade subject to some legislative amendment that reduced the variability of its current system.
25. Given the substance of the US complaint and its chronology, it was with some surprise that
Canada recently learned that the US Title 35 patent legislation had been amended by the enactment of
the Intellectual Property and Communications Omnibus Reform Act of 1999  (S. 1948) in
November 1999. The reform proposals appear to have come before the House of Representatives in
March 1999 and subsequently, before the Senate in November 1999.  In the result the amending
proposals were both debated and passed into law during the pendency of this complaint.  The Panel
                                                     
18 TRIPS, the opening, or “Desiring”, recital to the Agreement.
19 At paragraph 6 of this submission, and see: Exhibit No. 25.WT/DS170/R
Page 140
will recall from the record of these proceedings that the US Ambassador formally requested
consultations on May 6, 1999.
26. As the amendments are not currently before the Panel, Canada would now put them in
evidence as Exhibit No. 26.  In their material part the amendments appear as Subtitle D of Title IV ofthe amending Act and may be cited as the: Patent Term Guarantee Act of 1999 (Term Guarantee
Act).
20
27. The purpose of the Term Guarantee Act is, in the synopsis given by the US Patent and
Trademark Office, to ensure that: “Diligent applicants are guaranteed a minimum 17-year patent
term. ”.21 (Bold face  added for emphasis)  A Member of the US House of Representatives, Dana
Rohrabacher, expressed the same view in respect of  the purpose of the amending legislation, reporting
that it was enacted “...to assure a minimum patent term of 17 years  from the date a patent is
granted .”22 (Bold face  added for emphasis).
28. The parallels between these descriptions of the effect and purpose of the Term Guarantee Act
with the US, Mexican and Canadian NAFTA commitments as well as with Canada’s section 45regime are striking.
29. Two provisions of Subtitle D merit particular consideration.  The first concerns
subparagraph 4402(b)(1)(B).  It provides and guarantees  that, subject to certain prescribed
conditions, if, in the face of failures or delays in the Patent and Trademark Office, a patent does notissue within 3 years of the actual filing date, the term shall be extended one day for each day of delay
beyond that three year period.  In other words, this new US legislation provides that there is a
guaranteed term of “effective” protection for 17 years from the date of grant.
30. The second provision concerns the exception to the guarantee set out in
clause 4402(b)(1)(B)(iii).  It is of particular note because it expressly excludes from the calculation of
the guarantee period, any processing delays requested by the applicant.  Canada believes this
provision to be noteworthy because the US has ar gued that the average pendency period of 5 years
under Canada’s section 44 regime is too long and unwarranted.
23
31. However when, in this latter respect, one deducts the delays that occur because of the failure
of an applicant to request “examination” on an immediate basis, as the Rules described in Canada’sevidence
24 respecting section 44 applications would encourage, the approximate total delay at issue is
the same 3 year delay that is sanctioned by the US in its new law as being “a reasonable period of
time [which avoids] unwarranted curtailment of the period of protection.”.25
                                                     
20 Intellectual Property and Communications Omnibus Reform Act of 1999  (S. 1948), Subtitle D–
Patent Term Guarantee.  Reproduced as Exhibit No. 26.
21 PTO Pulse –January 2000, American Inventors Protection Act of 1999 is Law , at page 2.
Reproduced as Exhibit No. 27.  (Note that ‘guaranteed minimum term’ appears to be ‘code’ for “effective”term.)
22 Dana Rohrabacher, Summary of Patent Reform Legislation , at page 1.  Reproduced as Exhibit
No. 28.
23 The 1997 and 1998 Annual Reports of the EPO (European Patent Office) indicate that EPO’s
average processing time for applications which resulted in a patent during 1996 was 46.9 months, rose to 50.2months in 1997 and  in 1998 decreased to 44.7 months.  It would appear that this period begins when anapplicant requests examination and consequently EPO response times are of the same order of magnitude as
Canada’s
.
24 Davies Affidavit, paragraphs 26 to 29.
25 The quoted words, with necessary grammatical adjustment, are, of course, drawn from paragraph 2
of Article 62.WT/DS170/R
Page 141
32. Succinctly put, the Patent Term Guarantee Act enacts a new term of protection regime which
limits the erosion of the “effective” term of protection under the US 20 years-from-filing regime to 17
years.  This is, of course, the identical “effective” term of protection that is guaranteed under
Canada’s section 45 regime.
33. Canada believes that it is pertinent to recall that the US conceded in its response to the Panel’s
Question 8 that the effect of Article 1.1 is to require substantive compliance with the relevant
obligations of the TRIPS treaty and that the form  of compliance is not determinative of a compliance
issue.
34. The US’ implementing legislation in consequence of TRIPS and its patent term guarantee
amending legislation confirm that the US recognises, and accepts in its municipal law and policy, that17 years of patent protection is substantially equivalent or superior
26 to the variable term of
“effective” patent protection which, under the TRIPS term formula, is inevitably shorter than the
twenty year period it (and other municipal laws) refer to.
35. Thus while conceding that substance  is more important than form , the US, in direct
contradiction to this admission, is asking this Panel to disregard the substantive compliance  of
Canada’s measure and to denounce it as deficient in form .
36. In the face of this request, and taking into account the TRIPS Agreement’s broad and
underlying objective of ‘promoting the  effective and adequate  protection of intellectual property
rights’27, the comments of Representative Rohrabacher respecting the rationale underlying the Patent
Term Guarantee Act of 1999  deserve close attention within the context of these proceedings.  Those
comments were:
As everyone is aware, the current law governing patent term
is 20 years from the date of file  (sic) .  Patents applied for
after June 8, 1995, when the provision eliminating the 17-
years-from-grant guarantee took effect, have been losing
precious time under the law. Before the enactment of S.
1948, these inventors could no longer rely on a guaranteed
term of protection.  In some cases, several years of effective
post-grant protection  could have been lost due to Patent and
Trademark Office (PTO) administrative delay.  ( Bold face
added for emphasis)
Ultimately, if the PTO does not issue a patent within 3 years from the
date of original file, the patent term will be compensated day-for-dayuntil the patent issues, ...
This approach, ... effectively gives back to the non-dilatory
patent holder what I have fought for – the right to a
guaranteed 17 year patent term.
28
                                                     
26 It is equal or superior because it establishes a floor, beneath which the variable term may not fall
(except when the delays are caused by the applicant).
27 TRIPS, the opening, or “Desiring”, recital to the Agreement.
28 Exhibit No. 28, Subtitle D – Patent Term Guarantee Act of 1999, paragraph 2 and parts of
paragraphs 3 and 4.WT/DS170/R
Page 142
37. In providing 17 years of guaranteed patent protection, Canada’s measure is not only
consistent with and equivalent to the substantive requirement of Article 33 when read in conjunction
with Article 62, it is also consistent with the complainant’s own law and policy as expressed in US
municipal law.
IV. CANADA’S “AVAILABILITY” ARGUMENT AND EVIDENCE
38. The US has also misstated and mischaracterized Canada’s argument in respect of the
“availability” of a term of patent protection that “shall not end before the expiration of a period of
twenty years counted from the filing date.”.  In this respect Canada has stated that “section 45 does
not provide, or otherwise require, that the term of protection conferred shall end before the expiration
of the twenty year period measured from the filing date of the patent application”.29  T h e  U S  h a s
never contradicted this statement.
39. As Canada has already observed, the US ar gument and description of the requirement
imposed by Article 33 reads out the word “ available ”.  The US also relies on inconsistent
propositions of law; for example, it has, in developing its Article 70 argument, denied that the
Agreement is retroactive.30  However, in impugning Canada’s availability argument, the US argues, at
paragraph 13 of its Rebuttal Submission, that Old Act patentees cannot be said to have waived a
TRIPS-level term of protection before it existed.  This argument not only misrepresents Canada’s
position, it lacks logical consistency with the US’ other arguments.
40. It is obvious that prior to the 1989 changes in Canada’s municipal law or the negotiation of
TRIPS, patent applicants would not be directing their minds to a “twenty year from filing” time
frame.  In Canada’s view that is beside the point.
41. As Canada observed in paragraphs 31 and 32 of its Second Submission in reference to US
Exhibit 11, the normal period of delay between filing a patent application and obtaining regulatoryapproval for pharmaceuticals typically took 10 years.  In these circumstances, and as Canada’s
explanation clearly demonstrates, the applicant for a patent would have a clear motive to delay the
process time so that the start of the period of patent protection would more closely match the time
from which it was ‘licensed’–received marketing approval–to market the product.  Such conduct has
nothing to do with a future right or benefit that may flow from TRIPS.
42. The evidence is undisputed that anyone who wanted to delay the issuance of their patent
could do so and, within the existing law and practice of Canada, terms of 20 years of patent protection
measured from the filing date were available without exception.
43. In Canada’s submission, it is not necessary that every applicant made a conscious choice in
respect to an unknowable, future ‘minimum’ term  formulation.  The substance of the Article 33
requirement is that the term be “ available ”.  On all the evidence it was, and is.  Anyone who saw an
advantage in delaying the issuing date of their patent in relation to the filing date could do so, and did.
44. Canada will not take up more of the Panel’s time by reiterating all of its arguments in relation
to availability.  They are fully developed in Canada’s earlier Submissions and Responses to PanelQuestions.
31  Canada will, however, take this opportunity to further respond to the US argument that
Canada’s Old Act law and practice did not provide a “sound legal basis” for the availability of a
twenty year from filing date term.
                                                     
29 Subparagraph 5(b), of Canada’s First (Written) Submission.
30 Paragraph 14 of the Oral Statement of the US.
31 See: Paragraphs 84 to 110 of Canada’s First (Written) Submission; paragraphs 30 to 57 of Canada’s
first Oral Presentation; and, Canada’s response to Panel Question 3.WT/DS170/R
Page 143
45. The Panel will recall that, as Exhibit 16, Canada filed evidence of the statutory basis for
demonstrating that there is a right, under the combined effect of subsection 30(2) and section 73 of
Canada’s Old Act regime, to 42 months of delays between the time of filing and issuance.  These
delays are directly related to essential steps in the processing of an Old Act patent application.  Theyare not dependant on particular circumstances which may give rise to additional delays provided by
statute
32 in any given case.  Nor are they dependent on the other, informal delays described by Mr.
Davies in his affidavit.33
46. Nor, as noted in paragraph 44 of Canada’s First Oral Presentation, does this showing of the
existence of a statutory basis for obtaining a delay in the prosecution of an application, take into
account the effect on “availability” that the actual examination time would have on the duration of theterm of protection if it were to be assessed against the filing date.
47. The US, in its Rebuttal Submission under secti on III A, treats the delays under section 30(2)
and section 73 as the only delays that were available to prolong the fixed seventeen year term, when
the latter was measured from the application filing date. As Canada has just explained, this is wrong.
48. The US also seeks to establish that these statutory provisions are unduly complex and
somehow abusive.  Canada denies this and would refer you to the discussion in paragraphs 10 to 13 in
its Second Submission.
49. In this respect Canada recalls that in answer to its third question, the US admits that its own
patent legislation “does and did contain provisions similar to Section 30.2 (sic) of Canada’s old Act”.
As Exhibit No. 28 demonstrates, these US statutory opportunities for delay would, as in Canada, be
additional to the everyday internal delays which occur within the US Patent and Trademark Office.
50. Canada has demonstrated with uncontradicted evidence that everyone without exception was
able to delay the issuance of its patent to a time later than 3 years after the application was filed.  No
one who chose to take advantage of those delays is subject to a court or any other body interfering
with its patent term as a result of the administrative actions taken to effect those delays.
34
51. Thus Canada has also demonstrated that its laws and practices permitting administrative
delays that had the effect of extending the term of protection (when measured from an applicationfiling date) had a ‘sound basis in law’ as required by the test set out in the  India – Patent Protection
case.
35  The US, in contrast, has failed to disprove the “sound legal basis” underlying these Canadian
laws and practices.
52. The Panel will also recall that Canada anticipated and addressed the issue that some of the
delays under section 30(2) were discretionary in its first Oral Presentation at paragraph 45 to 49.  Not
only are discretionary limitations expressly authorised under TRIPS Article 62.1, but we are
concerned here, in contrast to the prospective issues in the India – Patent Protection  case, exclusively
with historical fact.
                                                     
32 Such other delays would include, for example, requests from a patent examiner for information
additional to that already found in the application.  Under the statute the applicant has six months to respond to
such requests.
33 Davies Affidavit, paragraph 10.
34 See: Paragraphs 34 to 41 of Canada’s Second Submission.
35 India – Patent Protection For Pharmaceutical And Agricultural Chemical Products (AB-1997-5),
(WT/DS50/AB/R) (December 19, 1997) and see discussion of this issue at paragraph 36 and following of
Canada’s first Oral Presentation and at paragraphs 35 to 41 of Canada’s Second Submission.WT/DS170/R
Page 144
53. There is, in addition, no evidence that someone who was granted a delay had its patent term
subsequently shortened or otherwise interfered with on judicial or other competent authority review.
Nor is there any evidence that someone who sought to delay the issuance of a patent, for whatever
their private interest may have been, was ever denied the delay requested.
54. As a matter of uncontested fact the period of twenty years from filing was available to every
applicant throughout the period during which their application was pending.  There is no evidence
which can sustain or support a contrary finding.
55. The evidence is undisputed that anyone who wanted a delay obtained it, because it was
available, without exception, to anyone who made such a request.  Any applicant could withinCanada’s existing legal system and practice exercise control over when its patent issued in relation to
the application filing date.  The twenty year and twenty year plus terms of protection which, when
measured from their respective filing dates, were accorded to some 150,000 Old Act patents, and this
coupled with the total absence of any evidence that a request to delay or postpone the issuance of a
patent was ever refused, is uncontradictable evidence of availability.
36
56. History is history.  In these proceedings the US seeks to unmake it–on the basis of speculativeassertion and theory.  Not on the basis of evidence.
V. ARTICLE 70
57. Canada has previously argued that the transitional rules set out in Article 70 are irrelevant
because Canada’s pre-existing section 45 patent regime is fully compliant with the TRIPS Agreement.
Since Canada’s section 45 patent term of protection is equivalent to the TRIPS variable standard, and
since a term of protection of 20 years measured from the filing date was always available; the TRIPS
transitional rules are not engaged.
58. The US as the complaining party must not only establish that Canada’s impugned measure
does not comply with the requirement in Article 33, it must also establish that section 45 patents are
subject to Article 33.  In Canada’s submission, the US submissions have failed on all counts.
59. Article 70.1 provides that the Agreement, whic h of course includes Article 33, does not give
rise to obligations in respect of “acts” which occurred before the date of application of the Agreement.The US has conceded in response to the Panel’s que stion 11 that “By its plain meaning, ‘acts’ would
include the administrative act of granting a patent by a patent office”.  The US in paragraph 25 of its
Rebuttal Submission appears to further concede that the “act” of filing an application by a right holder
is also within the scope of Article 70.1.
60. Canada has produced as Exhibit 24 copies of Canadian Patent certificates for both the section
45 and section 44 regimes.  It is clear from the ‘language of grant’ used that the administrative act of
granting a patent includes, as an integral component of that act, a temporal limitation.
61. Thus in respect to a section 45 patent, the patent grants to the owner “for a term which expires
seventeen years from the date on which the patent is granted and issued in Canada” certain exclusive
rights and privileges in respect of the invention. The certificate is then dated over an official signature.
The certificate of grant is therefore conclusive of both the existence of the patent and the duration of
its term.
                                                     
36 Davies Affidavit, paragraph 15.WT/DS170/R
Page 145
62. The result is that the TRIPS Agreement does not give rise to any obligations in respect of
those “acts” which occurred before the implementation date.  This does not mean that the Agreement
does not have application to the “subject matter” which those patents protect.37  By force of
Article 70.2, it clearly does “Except as otherwise provided in the Agreement”.  There is, however,
such an express “otherwise” proviso for “acts” under Article 70.1.  There is no similar proviso for therights and privileges that flow from the patent and are attached to the invention or the “subject matter”
of patent protection.
63. In paragraph 27 of its Rebuttal Submission, the US again seeks to rely on contradictory and
inconsistent reasoning.  The US has said unequivocally that the Agreement is not retroactive (see
paragraph 14 First Oral Statement).  Now, however, it argues that pre-1996 administrative acts are
exempt, but only until January 1, 1996 at which time they become subject to what the UScharacterizes as the prospective
38 application of TRIPS standards.  That is, in the US view, pre-
application date “acts” are exempt until the application date.  Thereafter they become subject to the
Agreement.  This empty distinction is disingenuous.  The “acts” of filing an application and of
granting a patent for a fixed term are complete when they are made and, therefore, are not subject to
the Agreement.
VI. SUBJECT MATTER
64. Consistent with their reconstruction of the substance of Article 28 of the  Vienna Convention
on the Law of Treaties39, the TRIPS negotiators clearly intended to confirm, not contract out of, the
Article 28 Convention rule against the retroactive application of treaties to pre-treaty acts, facts andno longer existing situations, except as they otherwise provided .
65. They did this to a limited extent in paragraph 2 of Article 70 where they stipulated that the
TRIPS Agreement would, “Except as otherwise provided for in this Agreement”, have a limited
retrospective application, and give
...rise to obligations in respect of all subject matter existing at the
date of application of this Agreement...and which is protected...on the
said date, or which meets or comes subsequently to meet the criteria
for protection under the terms of this Agreement...
66. Paragraph 2 of Article 70 is concerned with obligations in respect of “subject matter”.
Canada and the US do not agree on the contextual scope of the expression “subject matter”.  Canadasays that granting a term of patent protection is an integral part of the act of issuing a Canadian patent.
Moreover, a term of patent protection is an obligation in respect of the life of the patent.  A patent
term is not an obligation in respect of subject matter.
67. The US position is more transitory and uncertain.  The initial position of the US assumed that
patents were “subject matter” and since they were “subject matter”, the Article 70.2 rule applied
unambiguously.
40  In its subsequent Oral Statement the US restated this assumption affirmatively,
where, after quoting the substance of Article 70.2, it asserted that: “A patent is a type of subject
                                                     
37 Contrary to the US criticism of Canada’s paragraph 113 (first submission), the US now
acknowledges that Canada is not making the unequivocal statement that the agreement has no application to pre-1996 patents: paragraphs 31 and 32 US Rebuttal Submission.
38 See: paragraph 15 of the US Oral Statement.
39 See: Canada’s response to Panel Question 6(d).
40 See: Paragraph 11 of the first Submission of the US, where it states that “...TRIPS...gives rise to
obligations...in respect of all patents (“subject matter”) existing...”.WT/DS170/R
Page 146
matter.”. Given this assertion, here again the Article 70.2 rule was said by the US to apply,
unambiguously.41
68. Canada denied the validity of the US assertion that patents were “subject matter” within the
meaning of TRIPS, noting that it was clear from the textual and contextual use of the phrase “subjectmatter” in the treaty that it meant the matter ; that is, the ‘work’, ‘mark’, ‘geographical indication’,
‘industrial design’, ‘invention’ or ‘layout-design’, that attracts the exclusive intellectual property
rights which serve to protect it.
42
69. Subsequently43 the US resiled fully from its two opening positions to agree with Canada that:
…>subject matter’ as used in the TRIPS Agreement
generally refers to the matter that is or can be entitled to
intellectual property protection.  Indeed, this is exactly how
Article 70.2 utilizes the term >subject matter’.44
70. However, having so resiled from its initial position, the US next attempted to bring the
concepts of both “patent” and “term of protection” back within the ambit of “subject matter” and,
therefore, of Article 70.2 by the use of a variety of compound terms, such as patented inventions45, or
expanded phrasings or explanations such as those used in paragraphs 24 to 30 of the Rebuttal
Submission of the US.
71. As argued in paragraphs 48 to 58 of Canada’s Second Submission, to read words like
“patentable” or “protected” into “subject matter” does violence to Article 70.2 as well as to the term
“subject matter” itself.  Such words when used in relation to “subject matter” are adjectival only.
They do not transform the thing itself.
72. Similarly, the resort to extended phrasings or explanations such as those used in paragraph 26
of the US’ Rebuttal Submission, saying that there is, under paragraph 2 of Article 70, an “...obligation
to a grant a TRIPS-level patent term to such inventions that existed on January 1, 1996.”, exceed the
plain meaning of the words used in both of paragraph 2 of Article 70 and Article 33.
73. The US now asserts that obligations in respect of subject matter, must be read as obligations
in respect of patentable subject matter and this would therefore include the Article 33 obligation for a
term of protection.  Reading in words is impermissible and reading in “patentable” into Article 70.2
creates redundancies as Canada previously argued.46
74. Clearly, a patent, which is the legal device through which the State protects an invention, isnot subject matter within the ordinary meaning of Article 70.2.  Consequently, the obligations referred
to in that Article do not apply to patents themselves, once issued, and would therefore not include
Article 33.
                                                     
41 See: Paragraph 10 of the Oral Statement of the US.
42 See: Paragraphs 66 and 67 of Canada’s first Oral Presentation, paragraphs 48 to 58 of Canada’s
Second Submission as well as its answers to Panel Questions 6,7 and 27.
43 See: the US responses to Panel Questions 7 and 13.
44 Canada assumes the use of the word “generally” is a reference to the fact, noted in Canada’s answer
to Panel Question 27, that in Articles 40.3 and 40.4 “subject matter” is used to refer to the matters underdiscussion elsewhere in the Article rather than to matters that may be the objects of intellectual property
protection.
45 See, for example the discussion of this issue in the US response to Panel Question 7.  See also the
discussion of the issue in paragraphs 48 to 58 of Canada’s Second Submission.
46 See Canada’s Second Submission paragraphs 50 to 52.WT/DS170/R
Page 147
VII. CONCLUSION
75. Canada believes that this, contrary to the US characterization, is a complex case. It is full of
subtlety and nuance. It raises important questions of the relationship between form and substance.  Of
course, it is, more particularly, a case about the meaning and scope of Article 33.  And, depending onthe answers to those two issues, it is perhaps also a case about the meaning and scope of paragraphs 1
and 2 of Article 70.
The context of this dispute
76. The commercial stakes at issue are undeniably large.  The US has made this very clear.  It has
said that Canada’s alleged non-compliance with its TRIPS obligations have “caused tremendousharm”
47.  And that this harm has been particularly severe for the pharmaceutical industry.
77. In its subsequent submissions the US has not pursued this aspect of its case.  There is,
however, no doubt that windfall monopoly profits wo uld accrue to the pharmaceutical industry from
extensions to the terms of protection that were granted by the Commissioner of Patents againstapplications which were filed in Canada prior to October 1, 1989.  And that those windfall monopoly
profits would be substantial.
78. Irrespective of quantum, there is an issue of equity that arises against those who, in the past,
made an economic choice to exploit their section 45 patent terms in one way and now seek to vary theterms of their bargain with society.  They wish now to exploit the new TRIPS term of protection
regime for their private advantage and against the broader interest of society.  This breaches two
Article 7 objectives.  It breaches the objective that intellectual property rights should contribute to the
mutual advantage of its producers and of its users.  And it breaches the objective that the intellectual
property rules should contribute “to a balance of rights and obligations”.
79. Thus the pith and substance of the US position is that it is attempting to obtain relief from the
World Trade Organization that, as the Abbott case
48 demonstrates, would not be available under its
own municipal law because of the inequity of the relief sought.
Summary of Canada’s Case
80. Against this background, Canada would like to thank the Panel for its close attention.
Interpreting the relevant provisions of the TRIPS Agreement is seldom, if ever, an easy task.  In this
regard it has been Canada’s goal throughout these proceedings to assist you in this challenge.
81. In further pursuit of this goal, Canada would sum up and reduce its submissions to their bare
essentials by offering the following synopsis of its position.
The scope of the obligation in Article 33
82. First, Article 33 imposes a single requirement which is: to make a term of patent protection
available beginning on the date the patent issues and ending 20 years from the date on which the
application was filed.  That is how the US has characterized the requirement in its legislation.  The
Article does not impose a requirement for a 20 year term of protection as contended by the US in its
                                                     
47 See: paragraphs 5 and 6 of the First (Written) Submission of the US.
48 See: paragraph 100 of Canada’s First (Written) Submission and Footnote 40 to that paragraph.WT/DS170/R
Page 148
submissions.  As the Agreement does not contain the very requirement upon which the US founds its
complaint, it fails.
The “equivalency” of terms of “effective” protection
83. Second, the term of “effective” patent protection that, under the TRIPS formula, begins
sometime during the course of the 20 years measured from the filing date, is inevitably  less than 20
years.  In Canada, it is normally 15 years.  In th e European Patent Office, it is of the same order.
84. The US, recognising the erosion of the term of protection that occurs as a result of processing
delays, has recently guaranteed a minimum period of 17 years from grant, excluding from the
calculation of ‘compensable delay’ any delays requested by the applicant.  Canada’s section 45regime guarantees an equivalent term of protection to that which, by virtue of its 17 year statutory
guarantee, the US deems reasonable within a 20 year from filing date system.
85. There is no room for debate here.  The US cannot seriously seek, on the authority of TRIPS,
to have the WTO impose a more onerous substantive requirement on Canada than it, in compliancewith its own TRIPS obligations, imposes on itself.
The “availability” of a 20 year-from-filing term under section 45
86. Third, all of the evidence before you is uncontradicted.  It confirms and establishes that a
period of protection of twenty years from filing grounded on a sound legal foundation was, under
Canada’s Old Act, available .  And, it was available without exception.  These are the uncontested
facts, there are no points of law involved.  The period described in Article 33 was available .  That is a
complete answer to the US complaint.
Article 70.1 and pre-application date “acts”
87. Fourth, the US now concedes that, consistent with rule against treaty retroactivity set out in
Article 28 of the  Vienna Convention on the Law of Treaties , the acts of filing an application for a
patent and the administrative act of granting a patent are within the scope of Article 70.1.  These are
complete and final acts all of which occurred before the date of application of the Agreement.  This
allows for only one answer.  The Agreement, including Article 33, does not give rise to anyobligations in respect of those acts.
Article 70.2 and the meaning of “subject matter”
88. Finally, the US over reads the meaning of “sub ject matter” within TRIPS in order to bring
either “patents”, or the “term of protection” obligations respecting patents, within the scope of the
obligation set out in paragraph 2 of Article 70.  This misconstrues both patent law and the Agreement.
Neither a “patent” nor the “term of protection” is “subject matter” within the meaning of TRIPS.
89. Nor, since the “term of protection” is not “subject matter”, can the Article 33 obligation
respecting the “term of protection” be interpreted, as the US seems to suggest, as being “an obligation
in respect of subject matter” within the meaning of paragraph 2 of Article 70.  Consequently the
obligation in Article 33 does not give rise to obligations under paragraph 2 of Article 70.
VIII.  DISPOSITION REQUESTED
90. For all these reasons as well as the reasons set out in Canada’s prior submissions and
responses to Panel Questions, the US complaint fails and Canada respectfully asks that it be
dismissed.WT/DS170/R
Page 149
ATTACHMENT 2.6
RESPONSES OF CANADA TO WRITTEN QUESTIONS FROM THE PANEL –
SECOND MEETING
(3 February 2000)
A. EQUIVALENCE
Q.29 (Canada) Even if Canada's Old Act patent term is roughly the same length as the
New Act term, how does it satisfy the requirement as to when the patent term should end?
Article 62.2 only authorizes curtailment of the pa tent term at the beginning, not the end, and
Article 33 clearly specifies a minimum end date.  Does this depend on the success of the
availability argument?
As Canada will demonstrate the TRIPS Agreement does not impose a specific end point for a
term of patent protection that must be met in all circumstances.  In this respect Canada notes that
Article 62, when read as a whole, is not limited to the authorization of the “curtailment” of the patent
term at the beginning of the term of protection.  Article 62 also contemplates and authorizes the
termination of the term of protection, before  the expiry of the period referred to in Article 33.
In contrast to the implicit argument of the Un ited States of America (US), Canada does not
believe that the term of protection provisions of  Canada’s Old Act section 45 and of TRIPS’ Article
33 are susceptible, on their face, to direct comparison.
Canada does not believe that the section 45 formula–which provides for a specified, fixed
term of protection measured from the date of grant–can be directly compared to the Article 33
formula–which provides for a variable term measured from the application filing date–because the
two provisions reference different commencement da tes and specify different numbers of years during
which the different amounts of protection they refer to shall be “available”.
Since the two types of provision cannot be compared by simple reference to their forms of
expression, Canada has, within its equivalency argument, sought to compare or assess the consistencyof one with the other by an examination and analysis of the  substance  of the amount of protection
described by the two different prescriptions of the term of protection.
As the Panel will recall from Canada’s previous elaborations of its analysis, it proceeds from
the basis that section 45 offers a guaranteed, fixed seventeen year term of protection for the exclusiveprivilege and property rights which, once granted, flow from a patent.  It next observes–and the US
concedes
1–that, in view of the combined operation of Article 33 and paragraphs 1 and 2 of Article 62,
the period of “effective” protection of the exclusive privilege and property rights will, under the
TRIPS formula, vary.
The amount of variation will depend on the length of the Article 62.2 pendency period which,
of course, delays the date of grant and so foreshortens the nominal amount of protection of the
exclusive privilege and property rights available und er the TRIPS formula.  The amount of variation
will also depend on the happening, under the authority of Articles 62.1 and 62.4, of any act of
                                                     
1 See: the US response to Question 1(b) in the questions posed by the Panel at the conclusion of its first
substantive meeting with the parties (December 20, 1999).WT/DS170/R
Page 150
revocation, of cancellation or of default in the payment of maintenance fees.  All or any of these will,
of course, accelerate the expiry date of the patent in question and so truncate the amount of
“effective” protection afforded to the exclusive privilege and property rights granted by a patent.
In the result, under the TRIPS formula neither the commencement date–the date of filing–nor
the end date–the expiry of the twenty year period–can be said to represent a fixed, substantive norm
of the quantum of “effective” protection offered by the scheme of the treaty.  Accordingly, neither the
commencement nor the end date parameters used by  the Article 33 formula for determining the term
of protection can be viewed as being fixed, substantive requirements  or “benchmarks” of the
“effective” protection contemplated by the treaty.  They are instead elements of form  within which
substance  is determined.  Once the substance  is determined,  form loses any further significance in
an assessment of the equivalency or consistency between one system for the measurement of the termof patent protection and the other.
As the Panel will also recall
2 in Canada the pendency period under the New Act’s, undeniably
TRIPS consistent, formula has, whether as an average, a mean or a modal “norm”, been
approximately 5 years.3  In the result, in Canada the “normal” “effective” term of protection under its
undeniably TRIPS compliant section 44 has, correspondingly, been approximately 15 years.4
Given this analysis and its results Canada has consistently framed it’s argument as being that
a fixed term of 17 years from grant was equivalent or superior to the variable term that results from
the formula in Article 33.  This argument is not dependant on the availability argument, although thelatter is complementary of the first.
In paragraph 8 of it’s Second Submission, the US asserts that Article 62.2 addresses the
commencement of the term of protection and not the expiration date while Article 33 is concerned
with the end of the period of protection.  This assertion is unfounded and is based on an incompletecontextual analysis.
Article 33 addresses the commencement–being, the filing date–and the end–being twenty
years from the filing date–of a period during which a patent will provide protection after the patent
issues. Moreover, as noted above Articles 62.1 and 62.4 address TRIPS sanctioned actions which
operate to deprive the Article 33 end date of any fixed meaning.  Accordingly the provisions of
Article 62 operate to reduce the dates referred to in Article 33 to matters of the  form of determining ,
not defining , the amount  of “effective” protection available under the Article.
                                                     
2 See: paragraphs 53 and 54 of Canada’s First (Written) Submission, the Davies Affidavit,
paragraph 29 and Exhibit F thereto, paragraphs 21 to 26 of Canada’s First Oral Presentation as well as the
discussion in paragraphs 17 to 21 of Canada’s Second Oral Presentation.
3 The five year pendency period compares favourably with the experience in the European Patent
Office (EPO).  See paragraph 30 of Canada’s Second Oral  Presentation and footnote 23 to that paragraph.  This
pendency period would also appear to compare favour ably with the US experience under its TRIPS compliant
legislation since the US has been motivated to enact a Patent Term Guarantee Act  that compensates successful
applicants for delays in the grant of their patents that have exceeded three years.  See: paragraphs 25 to 37 of
Canada’s Second Oral Presentation and Exhibit No. 26.
4 Canada has not presented any evidence in respect of the “normal” amount of “effective” protection
that may be lost as a result of acts of revocation, cancellation or default of maintenance obligations because
neither the TRIPS scheme–in place for about 4 years–nor its municipal counterparts–in place in Canada for
about 10 years–have been in place for long enough to generate a reliable indication of the amount of termtruncation that may be expected to occur.  The dou btful reliability is enhanced by the fact that, a priori , acts of
default are most likely to occur at the end of the nomina l TRIPS term rather than in the early years of protection.WT/DS170/R
Page 151
Article 62 by its plain language is concerned with both the acquisition and maintenance of
intellectual property rights as stated in it’s title.  Article 62.2 addresses unwarranted curtailment by
procedures associated with obtaining the right; while Articles 62.1 and 62.4 address matters relating
to the acquisition, maintenance and revocation of “effective” protection.
Canada recalls that in answer to Canada’s Question 4 following the first substantive meeting
of the parties with the Panel, the US conceded that a patent owner could forfeit it’s patent by failing to
pay maintenance fees at any time during the 20 year period counted from the filing date.  The
rationale for this admission is clear.  A patent is a private right which the owner can, within certain
legal limitations5, exploit or abandon as the owner chooses.
US municipal law accurately describes the TRIPS term of patent protection as a term
beginning on the date the patent issues and, subject to the fulfilment of maintenance obligations,
ending 20 years from the filing date.  The term of protection which must be made available occurs
within a twenty year time frame but is, as the US concedes6, inevitably less, whether by erosion of the
commencement date or whether by truncation of the expiry date.  There is nothing in the Agreement
that requires a patent owner to either choose or accept a patent for an irrevocable period of time.  Apatent is a privilege, obtained on the application of and largely at a time controlled by the applicant, to
be exploited as the grantee chooses.  It is not a burden which the grantee must take up and discharge
at the behest of and for a period prescribed by the grantor, irrespective of the grantee’s interests–
whatever they may be.
Against this background, a Member’s obligation under Article 33 is to make a period of
protection “available” which, subject to acts of revocation, cancellation and of default in maintenance
obligations, does not end before twenty years from the filing date.  That is the form  or standard of
measurement for the protection to be afforded.  It is not a definition of the substance of the protection
which is actually to be  realized  under the TRIPS obligation and against which a Member’s
compliance is to be considered.
The substantive period of patent protection only arises after a patent issues and may, by either
an act of revocation (or cancellation) by the granting authority or an act of default by the grantee, end
at any time before the running of the term set out in Article 33.  The US has conceded
7 that Article 1.1
allows that, within a Member’s legal system or practice, a Member is free to determine the method of
achieving substantive compliance  with its TRIPS obligations and is not limited by matters of form .
Canada has demonstrated that in Canada and Europe8 the normal pendency period for the
processing of an application is approximately fi ve years, resulting in approximately 15 years of
substantive or “effective” protection.  This is less “effective” protection than the 17 years guaranteed
by a section 45 patent.9
As the fourth Recital to the TRIPS Agreement acknowledges “intellectual property rights are
private rights”, thus a patent owner is free in the exercise of it’s private property rights to terminate its
“effective” term of protection prematurely without any negative impact on the grantor Member’s level
                                                     
5 See, for example, Articles 29, 30, 31 and 40.
6 See, the US response to the Panel’s December 20, 1999 Question 1.
7 See: the US response to the Panel’s December 20 1999 Question 8 .
8 See: paragraph 30 of Canada’s Second Oral Submission and footnote 23 to that paragraph respecting
the EPO’s average response times in respect of EPO patent applications.
9 This too is less than the seventeen years of protec tion from grant recently guaranteed by the US’ new
Patent Term Guarantee Act of 1999.WT/DS170/R
Page 152
of compliance with its TRIPS obligations.10  Similarly, in the prosecution of its application for patent
privileges, an applicant is, within certain limits, free to choose when the privileges will be granted and
so give life to the benefits of patent protection.  Thus the substantive benefit of 17 years under section
45 is at least equivalent to the substantive, but variable, period of normally 15 years available under
the TRIPS formula, no matter when it might occur in respect of the defined, nominal period whichfalls within the parameters set out in Article 33.
The period of “effective” patent protection is su bstantively equivalent and not dependant on a
specific end date as described in Article 33, particularly as that period may be modified by the
operation of the activities referred to in Articles 62.1, 62.2 and 62.4.  Article 1.1 suggests that if the
substantive obligation is met by a member’s legal system and practice, that is sufficient.  As the US
put it in answer to the Panel’s Question 8 of December 20, 1999:
So long as the relevant obligation [to provide a patent  term of protection] is indeed fully
implemented and has a sound legal basis in a Member’s legal regime, the precise method of
implementation [17 years from grant term versus a variable 15 year from filing term] is left to
the Member.
Canada’s section 45 regime does not specify an end date in relation to the application filing
date.  Canada’s law and practice does not, therefore, require the period to end before the expiry of any
particular period measured from the filing date.  A ccordingly, an applicant acting in it’s own private
interest is free to expedite or delay the issuance of it’s patent in the same way it is free, oncepossessed of a patent, to abandon or forfeit it’s patent and its patent rights whenever it chooses.  In
other words the commencement and end date benchmarks of the TRIPS formula for determining the
term of protection circumscribe the limits of, but do not define, the minimum quantum of the
“effective” term of protection that the Agreement requires its Members to provide to successful
applicants for the patent privilege.
In Canada’s First Oral Presentation
11, it observed that the inviolate condition precedent to a
term of protection is a patent.  It is Canada’s view that Article 33 reflects the TRIPS objective of the
need “to promote effective  and adequate protection of intellectual property rights”.12 (Bold face  added
for emphasis)  The substantive concern of Article 33 is not the end date, which a patent owner can end
early if it chooses, but rather the effective term of protection.  Substantively, 17 years from grant
provides more “effective” protection than a 20 year from filing regime.  The US understanding andacceptance of this fact is reflected in it’s new Patent Term Guarantee Act of 1999.
13
Accordingly, since within Canada’s “equivalency” argument the TRIPS end date only has
significance for the purposes of determining the amount of “effective” protection offered by the
Article 33 formula, it loses any further significance in the consistency analysis and is ‘spent’ once thatanalysis is complete.
14  In this sense the “equivalency” argument is sustainable on its own merit and is
not dependant on the success of Canada’s “availability” argument.
                                                     
10 This point has been conceded by the US in its response to Canada’s Question 4 posed following the
first substantive meeting of the parties with the Panel.
11 See: paragraphs 12 to 14 of the written version of that Presentation.
12 TRIPS, the first or “desiring” recital to the Agreement.
13 See: paragraphs 25 to 37 of Canada’s Second Oral Presentation and the associated exhibit,
Exhibit No. 26.
14 In simplistic arithmetic form the analysis says that: twenty years from filing less the pre-granting
pendency period and less any period arising from acts of revocation or default in maintenance obligations equals
the term of “effective” protection.WT/DS170/R
Page 153
However, as noted above, the “availability” argument is complementary to the “equivalency”
argument.  Under Canada’s section 45 patent regime, the period of twenty years from filing, although
not expressly identified by statutory reference was nevertheless “available” to any section 45
applicant who wished to view, measure, seek and obtain its term of protection on that basis.
Accordingly, if the end date prescription in Ar ticle 33 has, contrary to Canada’s view and
analysis, any residual substantive content such that the Article 33 termination standard might be seen
to defeat substantive equivalency, then the fact that the twenty year term from filing was
unambiguously available under Canadian law and practice would operate to reinforce the
“substantively equivalent” argument as a complete and unrefuted answer to the US complaint.
B. AVAILABILITY (ARTICLE 33)
Q.30 (Canada) Are the powers under Canada's Patent Act  to reinstate and restore
patent applications discretionary and not automatic?  Is the Canadian Patent Office obliged to
reinstate or restore applications which have been abandoned or forfeited simply to procure a
delay in the term of protection?
There are two discrete elements to this questi on.  Both invite two answers: one technical; one
contextual. The first technical answer is that under the Old Act some of the statutory powers to
reinstate and restore patent applications were discretionary, some were automatic.
The section 73 remedy was automatic insofar as the relief was available as of right to an
applicant who paid the necessary fee.  In this se nse the “powers” were not really “powers”.  Instead
they were, notwithstanding the statutory use of the permissive word “may”, more akin to duties of the
Commissioner of Patents.  As such the duty to grant relief could, on proof of the payment of the fee,
be enforced in the courts by an applicant through the service of a writ of mandamus.  There was,
therefore, no administrative discretion at play.
The powers of relief under subsection 30(2) were discretionary insofar as, beyond the
payment of a fee, they were only exercisable where the applicant-petitioner was able to satisfy the
Commissioner that the applicant’s failure to meet the deadlines of the Old Act were “not reasonably
avoidable”.
However, the quasi-constitutional rules of natura l justice, which the courts will apply to the
exercise of discretionary authority by administrative officials, require that the exercise of discretion
not be unreasonably denied.  Among others standards, the courts will, in applying the rules of natural
justice, require that discretion be exercised in good faith, be exercised without discrimination, be
exercised taking into account the purpose of the legislation granting the discretion and be exercised
without reference to irrelevant or other improper considerations unrelated to the purposes or criteria ofthe statute granting the authority.
Thus the discretionary authority created by subsection 30(2) does not impose a serious
impediment to or burden on any applicant who, knowing the circumstances of its own delay, may
offer the explanation implicitly required by the statute and so deprive the Commissioner of thecapacity to refuse the relief requested.  In sum, although discretion exists it is not a discretion that
may be exercised frivolously to deny relief where the delay involved resulted from some reasonable
circumstance.  In the world of patent applications there are myriad factors that may exist to impede an
applicant’s capacity to proceed as expeditiously as the statute, in its arbitrary, general-rule-writing
fashion, contemplates.WT/DS170/R
Page 154
In respect of the second element of the question asked, the technical answer is that the
statutory criteria that frame and limit the exercise of the discretion referred to in subsection 30(2)
make no reference to the motive of an applicant seeking to have the discretion exercised in its favour.
The test for the exercise of discretion is “not reasonably avoidable”.
In this circumstance, were an applicant to sa y “I merely wish to delay the issuance of the
patent in question in order to obtain a twenty term from my filing date.” the Commissioner could, had
the situation ever arisen, have been entitled to refuse the relief requested since the applicant, in
revealing its motive, would not have shown that its failure to meet the deadlines of the application
process was “not reasonably avoidable”.
However, were the applicant able to say–as th e evidence clearly suggests–that, irrespective of
its underlying motive, “I was unable to meet the statutory delays because of” some reason related to
the timely completion of its application, then the Commissioner would have no authority to look
behind that reason to examine the motive of the applicant and refuse relief requested on the basis of
“motive”.
The contextual answer begins with the observa tion that the US complaint is only addressed to
those Canadian patents where the application was filed before October 1, 1989–that is before section
44 came into effect–and which were granted before October 1, 1992.
The question posed by the Panel concerning the discretion to re-instate assumes that there
may be circumstances where a discretion could be exercised to deny an applicant access to a term of
protection equal to the period referred to in Article 33.
There is no evidence that anybody who requested the reinstatement of their patent application
was ever refused that reinstatement by the Commissioner.  A search of Canadian jurisprudence hasrevealed that no patent applicant has ever sought ju dicial review of an administrative decision to deny
the reinstatement of a section 45 patent application.
Peter Davies, the Chairman of the Canadian Patent Appeal Board, has sworn that, in 33 years
of experience, he is unaware of any situation where an informal request for a delay was refused.  The
evidence is that informal delays were granted without  any necessity for the app licant to resort to the
statutory provisions of subsection 30(2) of the Old Act.
As noted above, the statutory delay under section 73 of the Old Act was available
automatically on payment of the required fee.  Th e subsection 30(2) discretionary power to refuse
reinstatement was never used.  The section was ultimately repealed as being redundant.  The
reinstatement provision now forms part of the procedures under section 73 of the current Act andthere is no discretion to refuse reinstatement so l ong as the applicant seeking reinstatement pays the
appropriate administrative fee.
15
In all these circumstances the existence of a discretionary power in the past has had no impact
on any patent applicant.  The evidence is uncontested.  It shows that no applicant who sought a delayor who utilized the various statutory devices available in order to postpone the issuance of its patent
was ever hindered in its achievement of that goal in any way.  Neither the existence nor the exercise
of the discretionary power in subsection 30(2) ever adversely affected any applicant.  Moreover, no
                                                     
15 Subsection 73(3) of the current Act now reads:
(3) An application deemed to be abandoned under this section shall be reinstated if theapplicant (a) makes a request for reinstatemen t to the Commissioner within the prescribed
period; (b) takes the action that should have been taken in order to avoid the abandonment;and (c) pays the prescribed fee before the expiration of the prescribed period.WT/DS170/R
Page 155
one since October 1, 1992 could have been, or will be, affected by the existence or exercise of such
powers because all patents issued after that date provide, or will provide, at least twenty years of term
when viewed from the perspective of their application filing dates.
In these circumstances, whether or not the Canadian Patent Office was obliged to re-instate or
restore applications which had been or were deemed to have been abandoned or forfeited simply to
procure a delay in the issuance of a patent, is moot.  The uncontested fact is that it did so in every
case.  And it did so without exception.
As Canada has argued in its First Oral Presentation at paragraph 46, the discretion in
subsection 30(2) to refuse reinstatement where the applicant has failed to satisfy the Commissioner
that the reason for its delay was “not reasonably avoidable”, although never exercised, is a reasonableformality for the maintenance of intellectual proper ty rights within the meaning of Article 62 and as
Canada also argued in that and the following paragraphs the existence of the discretion at issue posed
absolutely no risk to a patent applicant’s right to seek patent protection for its invention.
Q.31 (Canada) Paragraph 37 of your First Submi ssion states that an Old Act applicant
could "slow down the prosecution" of an application "by simply asking the patent examiner"
and paragraph 42 of your First Oral Statement states that "the applicant could do so
informally, simply by asking, or alternatively the applicant could take advantage of statutorily
mandated delays for perfecting applications and other essential procedural steps."  In addition
to the delays provided under Section 30(1) and (2) and Section 73 of the Old Act:
(a) What type of delay can an Old Act applicant ask the patent examiner for?
Beyond the formal delays available through the abandonment/forfeiture and reinstatement
procedures permitted by the statute and the regulatory delay of the final issuance referred to in
subparagraph 10 v) of the Davies Affidavit
16, the “informal” delays referred in the question and in the
Canadian materials referenced by the question were, just as described, “informal”.  That is to say that
they were not a delay of any particular or defined “type” or “class” of delay.
As the Davies affidavit makes clear, where an applicant may have had an interest in
postponing the issuance of its patent as, for instance, was often the case with a pharmaceutical
applicant seeking a closer confluence between its patent term and its marketing approval, it simply
needed to approach the examiner and ask him or her to retard the position of a particular application
in the queue of those applications awaiting examination.
Since the patent granting authority and its exam iners are typically only interested in getting a
targeted amount of work done within a targeted time frame, they have little interest in whether the
targets are met by examining any particular application at any particular time.  Consequently, theyhave neither a private nor a rule-based reason not to behave in a fashion that accommodates the
private timing interests of an applicant.
However, while there may not be any rule categorizing “types” or “classes” of delay, there
were several common types of circumstance in which an applicant might approach an examiner torequest the postponement of the examination of it s application.  One such situation was where the
applicant had an interest in a “co-pending” application, and wished to ensure that the two related
patents would issue on the same date.  Another was where the applicant was in the process of
preparing to file a “divisional” application for a previously filed application and wished to delay the
                                                     
16 Affidavit of Peter J. Davies, Chairman of the Patent Appeal Board of the Canadian Patent Office.
Reproduced in its entirety as Exhibit No. 8.  Hereafter cited as: Davies affidavit.WT/DS170/R
Page 156
issuance of the patent against the previous appl ication because one may not divide–“divisionalize”–an
issued patent.  A third involves the situation where the applicant is preparing a voluntary amendment
to its claim and so wishes to forestall the examin er from writing an unnecessary report (to which the
applicant would, of course, need to respond).
(b) What is the duration of the delay that a patent examiner is authorized to allow
an Old Act applicant?
As noted in the answer to paragraph (a) of this question, the delays or postponements
described in the Davies affidavit, were informal delays or postponements and as such they were
neither authorized nor unauthorized.  They were agreed to by examiners as a matter of professional
discretion, courtesy and client service.
In these circumstances the delays or postponements involved could have been for a relatively
short period or for a longer period of several year s.  It was not uncommon, for instance, for applicants
for pharmaceutical product or process patents to seek postponements of several, sometimes as many
as six or seven, years duration so that the term of their exclusive marketing rights under the patent
would not be reduced and ‘wasted’ while the pharmaceutical product in question was waiting formarketing approvals from the competent health and safety authorities.
That said, it is important to understand that while examiners enjoy a certain amount of
professional discretion in the exercise of their duties,  the length of the delay they might be prepared to
entertain as a matter of discretion and courtesy would be subject to, or influenced by, the reasonadvanced by the applicant in support of its request.
Thus, for example, if an applicant requested a delay to amend its original claims or to file a
“divisional” application, the time reasonably required to do either of those things would clearly serve
to set limits on the length of the delay or post ponement that the examiner might tolerate.  The
tolerance of examiners would also have been disciplined by the productivity standards or expectations
of their immediate supervisors as well as of the institutional expectations of the authority in which
they work.
(c) On what grounds can the patent examiner refuse such a request?
An informal request for postponement, like the informal agreement to postpone, is an
“informal” matter.  As such an informal request for delay, like the informal agreement to permit a
delay, is not bound by any formal rules defining what is “acceptable” and what is “not acceptable”.
However, the informal postponements available under Canadian administrative practice
existed in the shadow of the formal procedures available to procure formal postponements or delays in
the granting process.
Accordingly, just as the Commissioner may not unreasonably refuse to exercise his or her
formal, statutory discretion to reinstate an appli cation in favour of an applicant who offers some
reasonable explanation of why its delay was “not reasonably avoidable”, examiners would not, under
the discipline of the rules of natural justice and the doctrine of reasonable or legitimate expectations
17,
be able to lightly refuse a reasonable request for a postponement of the issuance of a particular patent.
                                                     
17 The doctrine of reasonable or legitimate expect ations holds that the legislative and executive
branches of government may not deny an applicant the benefit of some procedure or process where the
procedure or process has, as a matter of practice, pr eviously been available to applicants in analogous
circumstances.  It is usually viewed as being an extension of the rules of natural justice and procedural fairness.WT/DS170/R
Page 157
In this latter respect Canada would refer back to the examples justifying postponements that
are described in the answer to paragraph (b) of this question, and suggest that they offer some
guidance as to when an examiner might refuse to exercise his or her professional discretion to grant a
postponement or a postponement for the time requested.
Since the examples of justified postponement are linked to the reason for, and the
reasonableness of, the requested postponement, it would, in the absence of any formal rule, be
reasonable to conclude that examiners would refuse requests which were “unreasonable”.
Q.32 (Both parties) Does the TRIPS Agreement permit Members to give patent applicants a
choice between either obtaining protection early, or obtaining a term of protection that expires
twenty years from the filing date?
Yes, in theory.  Although it is not clear on  its face that the TRIPS Agreement actually
provides for the bipolar choice described by the question.  However, the Agreement certainly does not
prevent a Member from making such a choice available.
The obligation in Article 33 is straightforward.  It requires Members to provide that “The
term of protection available shall not end before the expiration of a period of twenty years counted
from the filing date.”  Once a Member has, consistent with its Article 1.1 rights and obligations,
adopted laws or practices that make the term referred to “available” on a sound legal basis, neitherArticle 33 nor any other TRIPS obligation prevents a Member from also making alternative terms of
protection available to such applicants who might, for their own private commercial or other strategic
interests, wish to obtain patent protection on a different basis than that referred to by Articles 33 and
62.
In this respect it is useful to recall, as the recitals to the Agreement plainly recognize, that
“intellectual property rights are private rights.”
18  It is similarly useful to recall that the US has
conceded19 that, as an incidence of the private nature of patent rights, patent owners have the right to
alienate, abandon or forfeit their exclusive patents rights on whatever terms they find acceptable.
It follows from the foregoing that: since TRIPS does not prohibit Members from offering
alternative terms of protection to patent applicants so long as the latter have a right to obtain the termreferred to in Article 33; and, since, applicants and patentees are free to deal with their private
property rights as they choose, a Member could, without breaching its TRIPS obligations, offer an
alternative term of protection formula which woul d provide greater certainty of protection to the
applicant by expediting the granting process and specifying a fixed term of protection that would,
while offering a substantively equivalent amount of “effective” protection, end on a date that wouldoccur before the date referred to in Article 33.
In such a scheme the applicant’s part of the bargain would, of course, be that it agrees, in the
exercise of its private property rights, to forfeit or abandon its right to obtain a term of uncertain
duration that would, nevertheless, not end before the expiration of the twenty year period countedfrom its application filing date.
                                                                                                                                                                    
See: Reference re Canada Assistance Plan (British Columbia), 1991 2 S.C..R..525; (1991) 83 D.L.R. (4th) 297.
(Supreme Court of Canada)
18 TRIPS, third “recognizing” recital.
19 See the US response to Canada’s Question 4 as posed during the first substantive meeting of the
Parties with the Panel (December 20, 1999).WT/DS170/R
Page 158
In sum the alternative scheme would offer patent applicants the hypothetical choice set out in
the question.  That is to say that the alternative would give applicants a choice between the variable
term of protection provided for by the TRIPS formula and a more certain period of protection that
would be available on an accelerated basis but would require the applicant to forego the right to a
term that did not end before the date referred to in Article 33.
Q.33 (Both parties) If Article 70.2 rendered Article 33 applicable to inventions under
protection in developed country Members on 1 January 1996, would it require those Members
to make available on that date a term of protection for existing patents that did not expire
before the end of 20 years from their respective filing dates or would it be sufficient that that
term was available at the time that the patent application was filed?
In the circumstance assumed by the question, it would be sufficient if the term was available
at the time the application was filed.  Indeed, as Canada has argued, the unchallenged facts that the
period was indeed available at the time applications were filed for section 45 patents is a complete
answer to the US case in any circumstances.  Cana da of course has argued that Article 70.2 does not
render Article 33 applicable to section 45 patents on two grounds.
First, no obligations arise under the Agreement in respect of an act of filing an application or
an act of issuing a patent for a fixed term where those acts occurred before January 1, 1996, being the
date of application of the Agreement for developed country Members.  Second, a patent is not
“subject matter” within the meaning of the TRIPS Agreement20 and consequently an obligation in
respect of the term of a patent  cannot be an obligation in respect of “ subject matter ”.
The burden is on the US to establish that the non-retroactivity rule in Article 70.1 does not
apply so as to take those “acts” outside the scope of Article 70.2 upon which, of course, its argument
relies.  It has not discharged this burden.  Moreover, the US has not addressed, let alone refuted,Canada’s submission that the obligation under Article 33 is triggered by the act of filing an
application and is confirmed by the act of issuing a patent and that the Article is, therefore, an
obligation in respect of those Article 70.1 “acts”.  The US admits
21 that both these “acts” are, where
they occurred prior to January 1, 1996, within the scope of Article 70.1.  Consequently, the US admits
that neither “act” gives rise to obligations under the Agreement.  However, the US goes on in the face
of the plain language of Article 70.1 to argue, without reason or logic, that, nevertheless, the
Agreement gives rise to obligations in respect of the patent term that is an integral22 element and
feature of those pre-application date “acts”.
                                                     
20 The US has conceded that a “patent” is not “sub ject matter” within the meaning of the Agreement,
see the US response to the Panel’s December 20, 1999 Question 7.  The US has also agreed with Canada that
“subject matter” refers to the object of protection, that is the work, mark, indication, industrial design, invention
or layout-design that attracts protection.
21 See the US response to the Panel’s December 20, 1999 Question 11 and paragraph 25 of its Rebuttal
Submission.
22 See paragraph 56 of Canada’s Second (Written) Submission, paragraph 60 of Canada’s Second Oral
Presentation and Exhibit No. 24.WT/DS170/R
Page 159
Q.34 (Both parties) How can those applicants whose patents were granted before the date of
application of the Agreement be said to have chosen to forego a later term when the TRIPS
Agreement had not even been applied?
Canada has addressed this question in it’s prior submissions and answers to questions.23 The
issue is not whether a particular TRIPS formula was known years before it was negotiated, obviously
it was not.
Section 45 patent applicants knew that when a patent issued it was guaranteed 17 years of
“effective” protection.  Those applicants also knew that Canada’s law and practice permitted the
applicant to take advantage of formal rules and info rmal administrative practices to control the issuing
date of the patent such that it would issue either at an earlier or later time than normal.  On theevidence before the Panel applicants clearly exercised this control in pursuit of their own choices as
determined by their own private interests.
Canada’s published laws and regulations, which applicants are deemed or presumed by law to
know, provided for delays in excess of 42 months.  When these formal delays are combined with theother opportunities for formal statutory or informal administrative delays described in Canada’s
Exhibit 8, there is no question but that periods of protection of twenty years or more were, when
measured from the application filing date, available. The uncontradicted evidence is that more than
150,000 applicants succeeded in obtaining terms of protection that, when measured from the
application filing date, were equal to or longer than twenty years.  The uncontradicted evidence alsoshows that no one who desired a similar term was ever denied it.
C. E
XISTING SUBJECT -MATTER (ARTICLE 70)
Q.35 (Canada) Do you argue that Article 70.2 does not apply to inventions under
protection of Old Act patents at all because of  the words "Except as otherwise provided for in
this Agreement…", or do you argue that it applie s to them in some respects, or do you argue
both as alternatives?
Canada argues that, by virtue of Article 70.2, some of the obligations under the Agreement
apply to and are in respect of “subject matter” recognized by and protected under the Old Act.
Canada also argues that Article 70.2 does not apply to all of the obligations of the Agreement
respecting patents.
More particularly, Canada argues that the obligation under Article 33 does not fall within the
scope of the obligations that are referred to in Article 70.2.  Article 70.2 does not apply to the
Article 33 obligation both because of its own deference to the “otherwise provided” prescriptions of
Article 70.1 and because Article 33 is not an obligation in respect of the “subject matter” referred to inArticle 70.2.
In this latter respect, an obligation in respect of  the act of applying for or the act of issuing a
patent which occurred prior to January 1, 1996 is not within the scope of Article 70.2 because
Article 70.1 expressly provides otherwise.  A patent term is granted as an integral element of, andattaches to, the patent itself.  A patent is not “subject matter” within the meaning of TRIPS.  The US
concedes this fact.
24  Accordingly Article 33, which sets out the TRIPS obligation respecting the term
                                                     
23 See for example paragraphs 97 to 101 of Canada’s First (Written) Submission, Canada’s response to
the Panel’s December 20, 1999 Question 24(a) and paragraphs 39 to 41 of Canada’s Second Oral Presentation.
24 See the US responses to the Panel’s December 20, 1999 Questions 7 and 13.WT/DS170/R
Page 160
of protection to be attached to a patent, cannot be an obligation in respect of “subject matter” as that
term is used and understood within the Agreement.
Q.36 (Canada) If you argue that Article 70.2 applies to inventions under protection of
Old Act patents in some respects, do you argue that it only applies to rights conferred in
relation to inventions but not to the term of protection?  If so, why?
Yes.  As explained in the answer to questions 5 and 7, the obligation respecting the term of
protection that is set out in Article 33 is an obligation that is in respect of two acts, namely: the act of
filing a patent application; and, the act of granting a patent.
The act of filing is the trigger which, subject to acts of revocation, cancellation and default in
maintenance obligations, sets the expiry date for the term of protection. However, 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 actually gr anted.  Therefore, the commencement of the term of
protection is triggered by the act of grant.  Acco rdingly, both the commencement and the expiry of the
term of protection depend upon the occurrence of these two successive and related acts.
The obligation in Article 33 is clearly an obligation in respect of “acts” and Article 70.1,
which confirms or reproduces the rule against non-retroactivity set out in Article 28 of the Vienna
Convention on the Law of Treaties  (Vienna Convention), states, in unequivocal terms and without
exception, that TRIPS does not give rise to obligations in respect of “acts” which occurred before 1January 1996.
The wording of the obligation described in Article 33 reinforces this conclusion.  The concept
of making something “available” which is central to the obligation described in Article 33 clearly
indicates an intention that the obligation is to be applied prospectively in respect of future acts and notretrospectively or retroactively in respect of past acts.  Were it otherwise the Agreement would be
retroactive in respect of this obligation and the US has clearly indicated that, in the case of the Article
70.2 obligation, the Agreement is not retroactive.
25
Tellingly, the US has regularly used the word “prospectively” in respect of the application of
TRIPS obligations throughout the material that it has filed with the Panel.26  The word prospective
means, “in the future”, as distinguished from “retrospectively” or “retroactively”.  Canada agrees.Article 33 is to be applied prospectively to acts of grant that occurred on or after 1 January 1996 and
not, by virtue of the direction of Article 70.1, retroactively to “acts” of filing or grant that occurred
before that date.
Canada assumes that the reference in Question 8 to “rights conferred in relation to inventions”
refers to the rights described in Article 28.  Article 28 provides that a patent shall confer on its owner
certain exclusive rights.  Unlike the obligation in Article 33, which is principally temporal in nature
because of its linkage of both the commencement and the expiry dates of the term of protection with,
as the case may be, the acts of filing and granting, the obligation in Article 28 does not depend upon
the occurrence of any act.
The operation of Article 28 depends solely upon a patent being in existence, and would apply
to any patent, whether Old Act or New Act, regard less of when issued.  As Canada pointed out in
paragraph 68 of its Second Submission, these rights are conferred by the patent itself.  As is clear
from the language of Article 28, they arise by virtue of the fact that the patent exists.
                                                     
25 See paragraphs 14 and 15 of th e Oral Statement of the US.
26 The most recent reference is to be found in its Oral (Rebuttal) Statement at paragraph 22 and see too
paragraph 15 of its (first) Oral Statement.WT/DS170/R
Page 161
It is significant that the drafters of the TRIPS Agreement dealt with the ri ghts that attach to a
patent (Article 28) and the term of protection (Art icle 33) in two spatially and connotatively separate
as well as distinctively worded provisions.  Article 28 states unequivocally that a patent shall confer
the exclusive rights enumerated therein. Such rights do not include a right to a the term of protection.(Article 33, of course, sets out the formula for determining the term of protection and establishes the
obligation that the term, as thereby circumscribed, shall be made “available” by Members.)
The time at which the rights must be made available is clearly at the time that the act of grant
occurs because the rights flow from the patent itse lf as opposed to the act of grant. However, aside
from the fact that both the commencement and the expiry of the term of protection described in
Article 33 depend, respectively, upon the occurrence of the acts of grant and filing, Members cannot,simply because the rights arise as of the date of grant, be expected to make available terms of
protection in respect of acts of grant that have already occurred.
Had the TRIPS drafters intended this retroactive result, the term of protection would have
been included in Article 28 as a right “conferred” by a patent and the rule against retroactivity in
Article 70.1 would have been expressly overruled by the association of the term of protection with theother rights conferred by the patent as opposed to its existing association within the Agreement with
the acts of filing and granting.
Alternatively and more directly, the drafters could have taken two other approaches to the
issue.  First they could have adopted a provisio n, like the Article 70.6 provision, which would have
explicitly made the Article 33 obligation retroactive to a time before the coming into effect of the
treaty, notwithstanding that, when granted, the term granted was in accordance with the then
prevailing municipal law.  Second, they could have written Article 70.2 to say that ‘except as
otherwise provided by the Agreement, TRIPS would give rise to obligations in respect of “subject
matter” and “terms of protection” existing at the application date’
Given their creation of and agreement to the retroactive rule respecting compulsory licences,
the fact that the TRIPS negotiators did neither in respect of the term of protection obligation is telling
evidence of their intentions.  They clearly underst ood how to make an obligation retroactive, and they
clearly did not do so in respect of Article 33.
Q.37 (Canada) Why is the term of protection an "integral part" of the act of grant but
the scope of the rights is not?
The term of protection is an “integral part” of the act of grant because the term of protection
is made (to use the word in Article 33) “available” to a patent owner when the act of grant occurs, and
the commencement of the term of protection is triggered by the act of grant.
Since the term of protection is an “integral part” of the act of grant in the sense just described,
the obligation in Article 33 is an obligation in respect of the act of granting a patent (as well as the act
of filing a patent application)  and, thus, subject to the non-retroactivity rule in Article 70.1.  The
other rights referred to in the question are those described in Article 28.  As stated in the response toQuestion 8, Article 28 is structured completely differently from the term of protection provision in
Article 33.  It is clear from the wording of Article 28 that the rights referred to there are conferred by
the patent and unlike the term of protection, these rights are in respect of the invention (subject
matter) and are not dependent on or derived from the happening of the act of grant or any other act.WT/DS170/R
Page 162
Q.38 (Canada) You stated that if Article 70.2 would have applied to Article 33 the
extension of a patent would lead to windfall profits, and that such windfall profits are contrary
to the philosophy of the Agreement.  Does the application of Article 70.2 to other obligations
with respect to subject-matter already protected give rise to windfall profits as well?
In theory, if the exclusive rights granted by a Member did not include all the exclusive rights
described in Article 28 as of the application date of the Agreement, the value of the patent would be
enhanced.  However, unlike prior acts which are expressly excluded by Article 70.1, the negotiators
used clear language in Article 70.2, in respect of subject matter, as they did in Article 70.6, in respect
of Article 31, to override the legal presumption against the retroactive application of an Agreement.
As noted in Canada’s response to Question 6(c)27 posed by the Panel following the first
substantive meeting with the Panel, the act of grant consummates the time-limited bargain between
the patent owner and society under which the patent  owner discloses the invention in return for a
limited period of exclusivity.  The time limitation of the exclusivity is critical to the bargain, both for
the patent owner and for society.  Had the TRIPS drafters intended that this critical term of the
bargain be re-written, they were required by Article 28 of the Vienna Convention to have so providedin unequivocal terms.  Rather than doing this, the TRIPS drafters affirmed the non-retroactivity rule in
Article 28 of the Vienna Convention through the inclusion of Article 70.1, from which it is clear that
the TRIPS drafters did not intend that the time limitation be altered in respect of such bargains
(consummated through the act of grant) entered into before 1 January 1996.
The U.S. complaint only affects some patents applied for before October 1, 1989 and that
were granted before October 1, 1992.  These will be referred to as the “affected patents”.
28  Canada’s
rules respecting the bargain on time limitation at each of these times (October 1, 1989 and October 1,
1992) was fully consistent with Canada’s then-existing international obligations.
The TRIPS Agreement was not even known at the time that these patent owners decided to
initiate the process of concluding their proposed bargains by filing patent applications.  By October 1,
1992, the proposed provisions of the TRIPS Agreement were known (through the release of the
Dunkel Draft on December 20, 1991) but the patent owners whose patents were issued after the
release of the Dunkel Draft had no reason for believing that the TRIPS Agreement would ever come
into effect.
These patent owners disclosed their inventions under the rules that existed at the time that
their time-limited bargains were consummated.  As has been argued by Canada throughout, these
patent owners disclosed their inventions under rules that (unlike the TRIPS rule) guaranteed  a term of
effective protection of seventeen years from grant.  If the Panel finds that Article 70.2 applies so as to
require an extension of the terms of affected patents, the patent owners in question will receive a purewindfall in having their bargains unilaterally re-written with nothing having been given or nothing
being required to be given in exchange, to the detriment of the Canadian users of technological
knowledge and so too, to the detriment of the Canadian consumer at large.
Such a result would clearly be contrary to the spirit of the statement of objectives in Article 7
of the Agreement which speaks severally of the importance of protecting and enforcing intellectual
property rights as contributing to a “...balance of ri ghts and obligations...”, of contributing to “... the
mutual advantage of producers and users of technological knowledge...” and of being “...conducive to
social and economic welfare”.
                                                     
27 See the second last paragraph of that response.
28 Any Old Act patent granted on or after October 1, 1992 received (or if the application is still pending
will receive) a term of protection equal to or in excess of TRIPS obligations.WT/DS170/R
Page 163
Canada assumes that the reference to “other obligations in this Question with respect to
subject matter already protected” is intended to refer primarily to the rights conferred by a patent and
acquired pursuant to Article 28.  As noted in the response to Question 8, Article 28 is drafted in a
manner such that the rights described therein are conferred by, and therefore attach to, the patent.
Canada conferred the rights described in Article 28 under both the Old Act and the New Act, so the
application of Article 28 to the affected patents cannot in fact result in any windfall to the affected
patent owners.
In any event, the concept of exclusivity lies at the heart of any patent regime.  While the
application of Article 28 to patents issued before 1 January 1996 in a patent regime of a member that
provided less than the full range of rights described in Article 28 might clarify and even expand upon
the rights and therefore the profits of an owner of a pre-1996 patent, that owner would already have
been enjoying a substantial degree of exclusivity and could hardly be said to have received a windfall
of the magnitude that would flow from the wholesale extension of a predetermined patent term that is
at issue in these proceedings.
Further and again in any event, the principa l TRIPS obligation to which the TRIPS drafters
ascribed any real retroactive significance was the obligation respecting the termination of the then
lawful compulsory licenses which, by virtue of the demonstrably retroactive provisions of Article
70.6, gave effect to the obligation in Article 31 some four years before the Agreement actually came
into effect for developed country Members. The fact that the TRIPS drafters did not include a similar
rule respecting time-limited bargains consummated through acts of grant occurring before 1 January1996 clearly indicates that they did not intend that such bargains be disturbed.
The issue of equity impacts on the entire US case.  The US demands that Article 33 and 70.2
be interpreted in a manner that would re-open the ba rgains with all patent owners whose patents were
issued with terms of protection that were less than 20 years measured from the application date.  Andthat those terms be extended resulting in windfall profits of tens and perhaps hundreds of millions of
dollars to individual patent owners at the expense of Canadian consumers.  And those gratuitous
extensions of terms of “effective” protection would do so without any reciprocal benefits for
Canadian society.
As previously observed, if the TRIPS negotiators had intended such far reaching and
extraordinary results, they were required by Article 28 of the Vienna Convention to use unequivocallanguage or unequivocal descriptions of circumstance such as that or those to be found in Article 70.6.
In marked contrast the TRIPS drafters, through Article 70.1, expressly reaffirmed the non-
retroactivity rule which is a general principle of in ternational law and has been specifically recognized
as such by the Appellate Body in European Communities - Regime for Bananas.
29
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29 European Communities – Regime for Bananas, WT/DS27/AB/R , at paragraph 235.