WORLD TRADE
ORGANIZATIONIP/C/W/358
9 July 2002
(02-3804)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
PARAGRAPH 6 OF THE DOHA DECLARATION ON THE
TRIPS AGREEMENT AND PUBLIC HEALTH
Second Communication from the United States
The following is the text of a second communication which was received from the Permanent
Mission of the United States on 25 June 2002, and which was circulated as an advance copy for the
Council's meeting of 25-27 June 2002.
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I. INTRODUCTION
1. We are fully committed to helping countries that are experiencing public health crises find
real and comprehensive solutions to these situations.  As one element of this effort, we support WTOMembers' use of the full flexibility of the TRIPS Agreement to help provide their citizens access to
affordable medicines to address these urgent situations.
2. As tangible evidence of our commitment, we are today making a second substantive
contribution to the dialogue in TRIPS Council aimed at fulfilling the mandate set out in paragraph 6
of the Doha Declaration on the TRIPS Agreement a nd Public Health.  In our March 14 paper we set
out a number of possible solutions to the situation identified in paragraph 6.  In this paper we are
adding greater specificity to the ideas we tabled in March with the goal of meeting the mandate set
forth in the Declaration that the TRIPS Council find an expeditious solution to this problem and to
report to the General Council before the end of 2002.
3. We are encouraged by the substantive contributions of other Members toward this common
goal and appreciate the communication and cooperati on we have had with Members as we developed
this second paper.  We are heartened that there appears to be an emerging consensus among WTOMembers on some of the key elements of a solution, including some we identified as having particular
merit in our March communication.  While not all issues have been resolved, given the constructive
approach taken by many Members we do not see any reason why we should not be successful in
finding an expeditious solution by the end of the year.  We would be greatly concerned by any
suggestion that Members accept that this deadline not be met.
4. In this paper we set forth the fundamental aspects of an expeditious, workable, transparent,
sustainable and legally certain solution.
II. NATURE OF THE PROBLEM
5. At Doha Ministers acknowledged the grave public health problems afflicting Africa and other
developing and least developed countries, especially those resulting from HIV/AIDS, malaria,tuberculosis, and other epidemics.IP/C/W/358
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6. Paragraph 6 of the Doha Ministerial Declaration on the TRIPS Agreement and Public Health
recognizes that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical
sector could face difficulties in making effective use of compulsory licensing under the TRIPS
Agreement in order to address these health problems.
7. The situations in which this difficulty might occur and where a TRIPS-based solution might
be necessary are likely to be limited.  However, given the grave health problems faced by certain
developing and least-developing countries we recognize that the consequences could be serious for
those encountering the problem.  First, difficulty woul d be expected to arise only in situations where
the supply of the pharmaceutical in question has not been provided by the patent holder through
normal commercial arrangements or through discou nt, donation, or other aid programs.  A TRIPS-
based solution can also only be expected to be effective where Members have, or are provided, the
resources necessary to procure pharmaceuticals under the terms of a TRIPS-consistent compulsorylicence, which includes the provision of adequate remuneration to the patent holder.
8. In addition, if no patents exist on the needed pharmaceuticals in the Member's territory, that
country does not need to grant compulsory licences in order to obtain those pharmaceuticals in its
market.  If patents do exist, the Member already has flexibility under the TRIPS Agreement to grant
compulsory licences.  Further, WTO Members are free under a compulsory licence to import theproduct from a manufacturer in another country so long as there is no patent on the pharmaceutical in
question in that other country.  Should there be a patent in the other country a compulsory licence
would also need to be issued in that country before medicines could be exported.  However, we note
that there are developing countries that possess the technological capability to manufacture
pharmaceuticals, which are not obligated to provide pharmaceutical patent protection until 2005.  Theexpeditious solution the TRIPS Council must devise, therefore, will apply to situations arising no
earlier than 1 January 2005.
9. Difficulties could arise, therefore, when a country with insufficient domestic manufacturing
capacity and experiencing grave health problems seeks to import a needed pharmaceutical from a
manufacturer in a WTO Member where a patent exists on that pharmaceutical.  In this situation, itcurrently would be inconsistent with Article 31(f) for that WTO Member to grant a compulsory
licence to its manufacturer to produce the drug solely for export to the country that has insufficient or
no manufacturing capacities in the pharmaceutical sector .  It is this situation that the TRIPS Council
must address.  Members have suggested addressi ng this situation through a moratorium, waiver,
amendment, or interpretation.
III. SCOPE OF THE SOLUTION AS SET FORTH IN THE DOHA DECLARATION
10. Paragraph 1 of the Doha Declaration on the TRIPS Agreement and Public Health makes it
clear that the public health problems addressed by the Declaration are those gravely afflicting many
developing and least-developed countries, especi ally those resulting from HIV/AIDS, tuberculosis,
malaria and other epidemics.  Therefore, in establishing the scope of the problems to which the
solution should address itself, we encourage Members to reaffirm the Doha Declaration by again:
Recognizing  the gravity of the public health problems afflicting many developing
and least-developed countries, especially those resulting from HIV/AIDS,
malaria, tuberculosis and other epidemics;
11. It is clear that the expeditious solution called for in Paragraph 6 of the Declaration is intended
to benefit those developing and least-developed country Members that have insufficient or no
manufacturing capacities in the pharmaceutical sector.  Therefore we encourage Members to furtherreaffirm the Declaration by:IP/C/W/358
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Recognizing that some of these Members have insufficient or no manufacturing
capacities in the pharmaceutical sector and could face difficulty in making
effective use of the compulsory licensing provisions of the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS Agreement) in order to
address those grave public health concerns;
12. However, the criterion of capacity established in Paragraph 6 of the Doha Declaration was not
defined.  To avoid disputes arising once a solution is adopted, Members should establish a procedure
to clarify which developing country Members can be considered to have insufficient or no
manufacturing capacity in the pharmaceutical sector or at least the factors to be taken into
consideration.  We would consider all least-developed Members to have insufficient capacity in the
pharmaceutical sector.
13. The WTO Secretariat has provided data on capacity in the pharmaceutical sector in certain
WTO Members.  We are currently evaluating this information to determine what assistance it can
provide Members in clarifying what constitutes insufficient or no manufacturing capacity in the
pharmaceutical sector.
IV. SITUATIONS TO BE ADDRESSED THROUGH EXPORTS
14. We have suggested preambular language defining the scope of the problems to be addressed
by the solution and the Members it is intended to benefit.  By once again drawing on the language of
the Doha Declaration, we should next consider the situation that will trigger the invocation of the
solution.
15. Clearly, the Doha declaration was directed at the needs of developing and least-developed
Members.  Therefore, it would seem appropriate that the solution be limited to developing and least-developed Members.  Failure to do so would undermine what potential there could be under the
solution for developing and least-developed Members to expand their pharmaceutical production
capacity by supplying other developing and least-developed Members.  If the solution were available
to producers in the developed world, there might be little opportunity for producers in developing and
least-developed Members to supply pharmaceuticals under this mechanism.  Therefore, regardless ofthe mechanism ultimately adopted to implement the so lution, we should consider situations in which
developing country Members with capacity in the pharmaceutical sector could be released from the
restrictions contained in 31(f) to export pharmaceuticals to other developing or least-developed
countries with insufficient capacity in the pharmaceutical sector.  Pursuant to the Doha Declaration,
least-developed countries were provided a further transition on obligations related to pharmaceuticals
until 2016 and are thus not bound by Article 31(f) until that time.
16. We feel it would be appropriate for Members, in considering an exception to Article 31(f), to:
Agree that a mechanism
1 shall operate to permit a developing country Member2
having sufficient manufacturing capacity in the pharmaceutical sector to export
needed pharmaceuticals to a developi ng or least-developed country that:
Is afflicted by a public health problem, especially those resulting from
HIV/AIDS, malaria, tuberculosis and other epidemics; and
                                                     
1 The exact legal nature of the mechanism has yet to be determined.  It could take the form of a
moratorium on dispute settlement or a waiver involving TRIPS Article 31(f) for particular countries, or aninterpretation, or an amendment.
2 Least-developed Members have until 2016 to comply with obligations relating to pharmaceuticals.IP/C/W/358
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Has "insufficient or no manufacturing capacity in the pharmaceutical
sector ";
17. While other approaches might have merit, there is a growing consensus among certain
Members in support of using the existing framework of flexibility established in the TRIPS
Agreement under Article 31 as a basis for a solution.  It would appear there has been consensus fromthe outset of these discussions that, should a patent exist in the territory of the developing country
Member seeking to import medicine, the Member could issue a compulsory licence to authorize such
imports.
18. Therefore, in addition to the elements outlined above, we believe it would also be appropriate
for Members to specify that a developing country Member seeking to import a needed pharmaceutical
that is patented in its territory:
Has authorized, in compliance with the provisions of TRIPS Article 31
(a)-(l), the use of the patent
3; or
19. However, concern has been expressed about how this solution will apply to Members seeking
to import needed medicines that are not under pate nt in their territory.  To address this specific
concern, we recommend that, if the needed pharmaceutical is not patented in the territory, Members
should specify that an importing country:
Has requested a developing or least-developed Member to manufacture
and export the needed pharmaceutical to its territory;
V. TRANSPARENCY
20. All Members appreciate the need for a transpar ent and efficient WTO-based solution that will
provide certainty for those Members addressed by paragraph 6.  In devising this solution, we shouldseek to ensure that it gives Members the opportunity to respond to the grave health problems facing
developing and least-developed Members with insufficient capacity in the pharmaceutical sector,
including through improved offers by patent holders to supply the country in need.  To that end, we
recommend that Members taking advantage of this proposal inform the TRIPS Council of actions
taken under this mechanism.  This will also increase transparency and enable other Members toensure that the medicines being exported actually reach the intended country and are not diverted into
other markets.  Members could:
Agree that in authorizing such use or making such a request, relevant Members
seeking to import the needed pharmaceuti cal will inform the TRIPS Council and
provide the Council with informatio n enabling interested Members to be
responsive in the shortest time possible. Agree that the TRIPS Council shall keep
under review the operation and effectiveness of this measure.
VI. ELEMENTS RELATING TO EXPORTING MEMBERS
21. Having touched on the factors Members should take into account in determining what
situations should exist in the country seeking to import under this solution, we should consider what
steps the exporting developing country Member sh ould undertake in responding to a request from a
developing or least-developed country with insufficient capacity in the pharmaceutical sector.
                                                     
3  It is further understood that in the event the importing Member owes, in accordance with Article 31,
an amount of compensation to the right holder, such amount could take into account any compensation paid tothe right holder under the licence issued in  the Member country exporting the product.IP/C/W/358
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22. Again, in considering an exception to Article 31(f), Members should:
Agree that the developing country Members seeking to export needed
pharmaceuticals under this mechanism shall:
Authorize use of the patent in compli ance with each provision of TRIPS
Article 31, except for Article 31(f), including notice to the right holder inconformity with Article 31(b);
23. All WTO Members should expect that the exporting Member will seek to ensure that the
medicines produced in its territory are not diverted from the Member for which they were intended,
either by being diverted to other markets or by leaking onto the domestic market of the exporting
Member.
24. Therefore, we would consider it reasonable for Members to agree that the exporting country
also:
Ensure that the entirety of the production is exported to the Member making the
request.
VII. ELEMENTS RELATING TO ALL MEMBERS
25. Having given consideration to the scope of the solution and the elements for determining what
situations may give rise to the application of the solution in both importing and exporting Members,we should also give consideration to the contribution Members that are not directly participating in
the implementation of the solution in a particular case can make to the overall successful operation of
the mechanism.
26. We believe that the TRIPS Council must, as part of any solution, affirm the commitment of
all Members to take necessary steps to prevent diversion of the relevant pharmaceuticals into theirmarkets, in order to ensure that the medicines reach the poor for whom they were intended.  All WTO
Members, consistent with their existing TRIPS obligations, should ensure that means are provided to
prevent pharmaceuticals made available under this mechanism from being diverted from the markets
for which they are intended.
27. The TRIPS Agreement already requires that Members provide the means for the right holder
to prevent entry or sale of such infringing products.  For example, Article 28 requires that right
holders be able to prevent such entry or sale where a valid patent exists.  In addition, at the border
TRIPS Article 44.1 requires WTO Members to provide measures to stop infringing imports before
they enter the stream of commerce.  Article 44.1 provides that " the judicial authorities shall have the
authority to order a party to desist from an infringement, inter alia, to prevent the entry into the
channels of commerce in their jurisdiction of imported goods that involve the infringement of an
intellectual property right, immediately after customs clearance of such goods ".
28. Therefore, we believe it would be appropriate, in order to ensure that the successful
implementation of the solution benefits those most in need, that Members:
Agree that all Members, consistent with their existing TRIPS obligations, will
ensure that means are provided to p revent pharmaceuticals made available
under this mechanism from being divert ed from the markets for which they
were intended.IP/C/W/358
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VIII.  MECHANISM FOR GIVING EFFECT TO THE SOLUTION
Article 31
29. While each option suggested by Members has some merit, at this stage we believe an
expeditious, workable, transparent, sustainable and legally certain solution may more likely beachieved through either a moratorium for dispute settlement or a waiver of the obligation in TRIPS
Article 31(f).  A moratorium or waiver of the obligation of TRIPS Article 31(f) may have several
advantages over other options suggested by Members.  First, agreement can be reached on a
moratorium or waiver much more easily and quickly than on an amendment to the TRIPS Agreement
and further delay would be required for Members' formal acceptance.  Crafting an amendment on
which all Members can agree would delay implementation of the "expeditious solution" beyond the
agreed deadline.  Should an amendment be adopted, it could prove to be either ineffective or seriouslyharmful in practice.  A further amendment of the Agreement would be required to correct this
situation.  Finally, if a country begins production for export relying on either an authoritative
interpretation or an amendment, its actions could be challenged as being inconsistent with the
interpretation or amendment.  Because a country would only have full legal certainty after the
conclusion of a dispute process - a situation that we would like to avoid - we are concerned that aninterpretation or amendment will not deliver the legal certainty and security sought by many WTO
Members.
30. In contrast, a moratorium or waiver (and the actions taken under them) would be approved in
advance, which would provide the manufacturing coun try with certainty that its production and export
of the product under the waiver will not be subject to challenge.
Article 30
31. Some Members have suggested an authoritative interpretation of Article 30.  Article 30 of the
TRIPS Agreement permits Members to provide limited exceptions to patent rights " provided that such
exceptions do not unreasonably conflict with a normal exploitation of the patent and do notunreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate
interests of third parties ".  This provision is intended to apply to statutory exceptions already provided
for in many countries' laws at the time the TRIPS Agreement was negotiated, situations such as non-
commercial experimental use, use aboard vessels te mporarily in the territory of a Member, and prior
user rights.  Interpreting Article 30 to allow Members to amend their patent laws to permit
compulsory licences to be granted to authorize their manufacturers to produce and export patented
pharmaceutical products to other countries would both unreasonably conflict with the normalexploitation of a patent and unreasonably prejudice the legitimate interests of the patent owner.  The
limited exceptions to patent rights authorized by  Article 30 do not require a government decision in
each case.  Article 30 contains no requirements for notifying a patent owner of use, for establishing
particular terms and conditions, for expiration if circumstances change, or for remuneration to the
patent holder.  The legitimate interests of third parties, in this case, the people facing health crises inother countries, can be dealt with adequately through the use of either a dispute settlement
moratorium or a waiver of Article 31(f).
Summary
32. With certain safeguards, developing country Members having sufficient manufacturing
capacity in the pharmaceutical sector should be permitted to export pharmaceuticals to a developing
or least-developed country that is afflicted by public health problems, especially those resulting from
HIV/AIDS, malaria, tuberculosis and other epidemics, and that lacks manufacturing capacities in the
pharmaceutical sector.  Where patents exist in the exporting country, the exporting country would
comply with each provision of TRIPS Article 31, except for Article 31(f).  Further, the exportingcountry would have to ensure that the entirety of the production under compulsory licence is exportedIP/C/W/358
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to the Member making the request.  All Members undertake, consistent with existing TRIPS
obligations, to prevent pharmaceuticals made available under this mechanism from being diverted
from the markets for which they were intended.  And finally, the TRIPS Council shall receive
information and examine operation of the solution for the benefit of those Members for whom it is
intended.
33. Notwithstanding the views we have expressed a bove, we continue to be willing to consider
any proposed solution with respect to Article 31 that is expeditious, workable, transparent, sustainable
and provides legal certainty.
34. We fully expect that by the next meeting of the TRIPS Council we will be prepared to offer
further substantive contributions to this effort with even greater specificity on the key elements and
mechanics of implementing a solution expeditiously by the end of the year.
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