19 Progressive Development of Protection Framework for
Pharmaceutical Invention under the TRIPS Agreement—Focusing on Patent Rights—
Research Fellow：Akiko KatoThis study examines the international protection framework that the TRIPS Agreement of the WTO is
forming in respect of the protection of pharmaceutical inventions by patent rights, from the standpoint of thetreaty interpretation. The TRIPS Agreement constitutes an annex of the WTO Agreement, and it is interpreted
by applying the customary rules of the interpretation of public international law. Therefore, this study initiallyclarifies the rules of interpretation that are applicable to the TRIPS Agreement. It then sorts out the relevant
provisions for the protection of pharmaceutical inventions by patent rights and the interpretation of theseprovisions, and attempts to gain a dynamic understanding thereof by considering different cases. Theinterpretation of the TRIPS Agreement is in the process of progressive development in the sense that it isclarified as a result of inter-state disputes set forth to the WTO dispute settlement procedure and discussions at
the TRIPS Council, especially discussions on developing countries that have difficulty accessing pharmaceuticalproducts. Through consideration of this process, this study clarifies the fact that the WTO Members areproceeding with finding a balance between the protection of pharmaceutical inventions by patent rights and thesocial need to use such inventions, on the international plane called the TRIPS Agreement, as well as thenecessity of such viewpoint.

Ⅰ Introduction
This study attempts to gain a dynamic
understanding of the framework for the protectionof pharmaceutical inventions by patent rights that
the TRIPS Agreement has been forming, from thestandpoint of treaty interpretation. The following
characteristics of the TRIPS Agreement make aclear distinction between it and the existing
IPR-related conventions: It (1) provides high-levelprotection and enforcement of IPR through the
Plus-Approach, (2) has various compliancemeasures to facilitate Members’ compliance withobligations, and (3) is premised on the application ofvarious GATT principles.
The improvements of the TRIPS Agreement
have been getting clearer through its application
since it came into effect in 1995, in the same way asother annexes of the WTO Agreement. The 4th
WTO Ministerial Conference in November 2001
has determined to discuss the TRIPS Agreement interms of (1) the TRIPS Agreement and publichealth, (2) protection of geographical indications,(3) review of the implementation of the Agreement
focusing on the protection of inventions regarding
animals and plant life, biological diversity andtraditional knowledge, (4) provision of incentives
for the transfer of technology to developing
countries, (5) treatment of non-violation complaints
and situation complaints in inter-state disputes
regarding the obligations under the TRIPS

Agreement, (6) electric commerce, and (7)technical cooperation between the Members(*1).
Among these, creating a balance between theprotection of pharmaceutical inventions by patentrights and the protection of public health is a fieldthat symbolizes a challenge for the patent system,
i.e., creating a balance between the interest of rightholders and social interest. In this field, nations
have tended to establish their own systems under
their domestic law in terms of patentability, theterm of protection, the contents of exclusive rights
and compulsory license, while placing the field outof the international harmonization of patent laws
under international law. On the contrary, since the
TRIPS Agreement became the first treaty to
impose the obligation to protect pharmaceuticalinventions without discrimination from inventionsin other industrial fields, it is highly likely toconflict with Members’ policies and has beencausing many inter-state disputes.
Therefore, this study considers how the
TRIPS Agreement has been developing aprotection framework in regard to the protection ofpharmaceutical inventions by patent rights, in lightof the rules of treaty interpretation. The TRIPS
Agreement is a treaty that constitutes an annex of
the WTO Agreement. Therefore, it shall beinterpreted by applying the rules of treaty
interpretation. This study clarifies rules that are
applicable to the TRIPS Agreement on the basis of
the general rules of treaty interpretation and the(*1) See Ministerial Declaration, WT/MIN(01)/DEC/1, 20 November 2001, paras.17-9, and Implementation-Related Issues andConcerns, WT/MIN(01)/DEC/17, 20 November 2001.

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specific rules of interpretation formed by the WTO
and its predecessor, GATT. On that basis, the study
attempts to gain a dynamic understanding of theexisting provisions of the TRIPS Agreement
concerning the protection of pharmaceuticalinventions by patent rights and changes in theinterpretation of the provisions, while using
inter-state
disputesandtheMinisterial
Conference’s declarations as examples.

Ⅱ Rules and Sources of Law
Applied to the Interpretation of
the TRIPS Agreement
For clarifying the rules of interpretation andthe sources of law applied to the TRIPS Agreement,
it is necessary to consider (1) three theories in thegeneral principles of international law, and Articles
31 and 32 of the Vienna Convention on the Law ofTreaties, and (2) authoritative interpretation of the
WTO and DSU under GATT and the WTO.
Through the consideration, (3) the rules andsources of law applied to the interpretation of the
TRIPS Agreement are derived: the rules ofinterpretation are the rules of interpretation under
the Vienna Convention on the Law of Treaties,
while the sources of law include a wide variety ofsubjects, such as the texts of both the TRIPS
Agreement (including the provisions incorporated
from the existing IPR-related conventions into the
TRIPS Agreement) and the WTO Agreement, therelevant context, object and purpose, agreements
between parties concerned at the time of
conclusion of the conventions, or subsequent
agreements or practices, and the records ofnegotiation.

Ⅲ The Framework of the TRIPS
AgreementtoProtect
Pharmaceutical Inventions byPatent Right
1

Framework for protection under the
TRIPS Agreement

This section takes into consideration therelevant provisions for the protection ofpharmaceutical inventions under the TRIPS
Agreement and a framework formed by various
measures to make sure Members comply withobligations.
The TRIPS Agreement first establishes a
non-discrimination principle among the innovation
fields in Article 27 (1) as a provision for the
implementation of protection, and then provides the
exclusive rights conferred on patent holders(Article 28) and the term of protection (Article 33).
In order to reduce the burden on Members thatcomes from such imposition of the same obligations

on all Members, the TRIPS Agreement set thetransitional arrangements in Article 65 and Article
66 (1) that allow Members who have difficulties
with immediately complying with the obligations topostpone the protection of patent rights. However,there are exceptional obligations to thepostponement. Members are obliged to establish
systems to file patent applications and to give
exclusive marketing rights for pharmaceuticalinventions (Article 70 (8) and (9)), in addition to the
obligation to give national treatment and themost-favored-nation treatment, upon the date ofentry into force of the WTO Agreement or upon
accession to the WTO.
Secondly, the following four stages can be citedin terms of provisions regarding exceptions andlimitations to protection: (1) limitation of patentablesubject matters (Article 27 (2) and (3)), (2)limitation of exclusive rights (Articles 30 and 31),(3) general exceptions regarding IPR (Article 40
regarding anti-competitive practices, and Article 73
regarding security exceptions), and (4) the
provisions of the object and purpose of the TRIPS
Agreement (Articles 7 and 8). However, forexample, regarding Article 30, which authorizes
Members to establish some exceptions andlimitations to the exclusive rights of patent holders
under certain conditions, and Article 31, which isrelated to use without the authorization of thepatent holder, including use by the government,
there are different interpretations of the wording of
the provisions and the relationship between thearticles. Moreover, regarding Article 7 (Objectives)
and Article 8 (Principles), there are both affirmativeand negative opinions on whether these provisions
are applicable to the interpretation of otherprovisions regarding IPR protection in the TRIPS
Agreement as the provisions of the object andpurposes of a treaty, in line with the rules of treaty
interpretation.
Moreover, the WTO and the TRIPS
Agreement institutionalized various compliancemeasures that have developed under internationallaw, such as the notification and examination ofMembers’ domestic IP-related systems. Members
are strongly obliged to comply with the obligations
under the TRIPS Agreement through theoverlapped application of these measures, which isalso a largely different point from the conditions
under the system of conventional conventions.
2

Framework Formed by Implementation of
the TRIPS Agreement

This study then considered how provisions
relevant to the protection of pharmaceuticalinventions considered in previous part areinterpreted, on the basis of three inter-state
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on the TRIPS Agreement and Public Health” (*2)(hereinafter the Doha Declaration) which was
adopted by the 4th Ministerial Conference in Doha.
(1) InterpretationofExceptions
toTransitional Arrangements regarding
ProtectionofPharmaceuticalInventions—Case of India—(*3)
Since this case represented the first complaint
regarding the obligations under the TRIPS
Agreement filed with the DSU, the panel report andAppellate Body report made clear the positioning of
the TRIPS Agreement within the WTO Agreement
and the standards applicable to the interpretation of
the TRIPS Agreement. While constituting an
integral part of the WTO system, the TRIPS
Agreement is “relatively self-contained” andoccupies the sui generis status. However, the panel
represented the view that the rules ofinterpretation under the Vienna Convention on the
Law of Treaties and the practices of GATT 1947 areapplicable, as “customary rules of the interpretationof public international law,” to the interpretation of
the TRIPS Agreement in the same way as otheragreements under the WTO.
The panel then examined whether India
complied with the obligations under Article 70 (8)and (9) of the TRIPS Agreement, which are
exceptions to the transitional arrangements. In
other words, since Members are free to determine
a method of implementing obligations under the
TRIPS Agreement in accordance with Article 1 (1)of the TRIPS Agreement, the fact that India
established a mailbox for pharmaceutical inventions
based not on a legislative measure but on an
administrative measure, i.e. the Ordinance by thepresident, does not conflict with the obligations.
However, despite the fact that both the draft
Patents Act and the Ordinance by the president had
elapsed, India did not give applicants any
information on the treatment of filed applications,and thus created a legally insecure condition. This
constitutes a breach of Article 70 (8). In addition,
the fact that India did not give the authority to grant
exclusive marketing rights to any appropriate
authority constitutes a breach of Article 70 (9). In
the Appellate Body’s examination of an appeal madeby India expressing its dissatisfaction with thefindings of the panel, the Appellate Body found thatIndia failed to comply with Article 70 (8) and (9)while correcting the panel’s findings in some points.
The panel and the Appellate Body gave strict

interpretations in light of the text of provisions, andaccurately indicated the balance between therespect to Members’ sovereignty and theimplementation of obligations under the TRIPS
Agreement. This has also brought about thetendency to substantially stultify transitionalarrangements. On the other hand, India takes apolicy of manufacturing generic pharmaceuticals
based on the compulsory license by utilizing thetransitional arrangements to meet domestic
demand as well as a policy of actively exporting
such pharmaceuticals to other Members lacking theability to manufacture domestic pharmaceuticalproducts. India has also been vigorously raising
issues in discussions on the Doha Declaration.
(2) Interpretation
regardingthe
Establishmentof
Exceptions
andLimitations to Exclusive Rights—Case of
Canada—(*4)
Secondly, in the case of Canada, a discussion
was held on whether a regulatory review exception(i.e., work for tests) and a stockpiling exception
provided in Section 55.2 of the Canadian Patent
Law fell under exceptions and limitations to the
exclusive rights of patent rights under Article 30 of
the TRIPS Agreement.
The meaning of this case can be considered in
the following three points: (1) broadening of theinterpretation of patent right-related provisions in
the TRIPS Agreement, (2) interpretation of object
and purpose of the TRIPS Agreement, and (3) rulesof interpretation and source of law of the TRIPS
Agreement.
Regarding (1), the panel revealed theinterpretation as follows. (a) Clarification of therelationship between provisions: Article 30 as well
as Article 31 are provisions that allow Members toestablish exceptions and limitations to the
exclusive rights of a patent holder as provided in
Article 28, and exceptions and limitations imposed
under Article 30 are subject to the prohibition ofdifferential treatment on the basis of the industrial
field of inventions as provided in Article 27 (1).
However, it has also been pointed out that the panel
clarified neither the relationship between Article 30
and Article 31 nor the specific measures allowed
under the said articles. The panel also revealed that(b) the acceptability of exceptions and limitations
admitted under Article 30 would be determined inlight of three conditions: whether the exceptions
and limitations are “limited,” “do not conflict with a(*2) Declaration on the TRIPS Agreement and Public Health, WT/MIN (01)/DEC/2, 20 November 2001.
(*3) The complaint by the United States is WT/DS50, and the complaint by the EC is WT/DS79. This report considers the panel
report (India -- Patent Protection for Pharmaceutical and Agricultural Chemical Products, Report of the Panel, WT/DS50/R, 5September 1997) and the Appellate Body report (Ibid, Report of the Appellate Body, WT/DS50/AB/R, 19 December 1997) in
response to the complaint by the United States.
(*4) The panel report for this case is Canada -- Patent Protection of Pharmaceutical Products, Report of the Panel, WT/DS114/R,
17 March 2000.

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normal exploitation by the patent holder” andensure the “legitimate interests” of the patent
holder. However, the panel did not provide anevaluation of Canada’s argument that the following
provision should be added to these conditions:
exceptions and limitations are measures forprotecting the “legitimate interests of third parties”
under Article 30. While (c) the panel did not
generally present specific measures acceptable
under Article 30, (d) it found that at least the test
exception fell under the acceptable measure but thestockpiling exception did not. It can be pointed out
regarding the panel’s examination that although thepanel found that the stockpiling exception curtails
the exclusive rights of a patent holder to the extent
that it cannot be considered to be “limited
exceptions,” the finding lacks specifics. It can also
be pointed out that both exceptions are inconsistentin the point of whether the purposes of acts areused as standards. Therefore, the findings on thestockpiling exception are not considered to be
sufficiently grounded.
In addition, regarding (2) interpretation of theobject and purpose of the TRIPS Agreement, bothparties and third countries provided someinterpretations. However, the panel did notinterpret the two exception measures under the
Canadian Patent Law in light of the provisions of
the object and purpose of the Agreement but madea finding in light of three conditions under Article
30. Due to this fact, it can be said that the panel did
not eliminate the possibility that the provisions of
the object and purpose were applied to theinterpretation of provisions of the TRIPS
Agreement, but that the panel’s interpretative
approach was unreasonable in the point that while
acknowledging the abstractness of the wording in
Article 30 and the presence of various
interpretations, the panel formed interpretations
only according to the wording. The cause of this isconsidered to be (3) an interpretative approach that
ultimately attaches too much importance to thetextual approach in which the panel uses therecords of the negotiations and the subsequent
practices of parties to the Agreement as rules ofinterpretation and source of law of the TRIPS
Agreement but does not hold any specificdiscussions on the purpose and background of
establishing the exception measures under the
Canadian Patent Law as well as the effect broughtby the measures on the exclusive rights of patent
holders, including individuals, in other Members.

(3) Interpretation of Grant of Compulsory
License—Case of Brazil—(*5)
One of the topics of current discussions on the
TRIPS Agreement is the relationship between thesaid Agreement and the Members’ systems ofcompulsory licenses. According to Article 31 of the
TRIPS Agreement, Members may grant a
compulsory license to a third party other than thepatent holder only when an applicant for license hasrequested that the relevant right holder grant alicense but the request ended in failure. Members
first determine the propriety of granting a license
for each application for license and then grant a
non-exclusive, non-assignable compulsory license.
In such case, the relevant right holder shall be paid
adequate remuneration. However, prior efforts toobtain authorization are not required in the case of anational emergency or for public non-commercial
use. But since there are various views on theinterpretation of what constitutes a national
emergency or public non-commercial use as well as
those who have authority to adopt theinterpretation thereof, there was the possibility that
the Members would be accused of violating
obligations by other Members in terms of grant ofcompulsory licenses. The possibility turned toreality in this case in which the United Statesissued a complaint against the Brazilian system ofcompulsory licenses. Under the DSU, thecomplaint was withdrawn since the United States
and Brazil agreed to a mutually satisfactory solution
through bilateral consultations.
Article 68 of Brazil’s 1996 Industrial Property
Law states that the patent holder shall be subject togetting the patent licensed on a compulsory basis if
his acts are recognized as abusive exercises of hisrights by a judicial or administrative decision.
Article 68 (1) provides that non-exploitation within
the country or insufficient commercialization of thesubject matter of patent rights would also be
subject to compulsory license. On the other hand,the same law establishes the exemption provisions
stipulating that the following cases are excluded
from being subject to compulsory license: cases
where this is not economically feasible whenimportation shall be permitted, where the non-use
is based on legitimate reasons, where serious andeffective preparations for exploitation areproceeding, and where there is an obstacle of alegal nature in terms of the failure to manufacture
or to market. Therefore, even if Brazil had
continued the DSU procedure, the panel was
unlikely to determine that the said law breached
the obligations under the TRIPS Agreement.
Rather, there was an option for Brazil to continue(*5) The request for consultation made by the United States is WT/DS199/1, 8 June 2000. The request for the establishment of
the panel is WT/DS199/3, 9 January 2001. The notification to the DSB of a mutually satisfactory agreement between the
United States and Brazil is WT/DS199/4, 19 July 2001.
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the DSU procedure in order to obtain authorizationby the panel on the consistency of the said law with
the TRIPS Agreement. However, the DSU aims tocontribute to clarifying the interpretation of theprovisions in the WTO Agreement and to form anagreement between the parties concerned
regardless of contents and process. Therefore, theinterpretation of Article 31 has not been madedetailed and clear through this case.
(4) TRIPS Agreement and Protection of
Public Health—Doha Declaration—
The results of intensive discussion on
problems
regardingtheprotectionofpharmaceutical inventions by patent rights thatwere left behind through the above cases is the“Declaration on the TRIPS Agreement and Public
Health” adopted by the Doha Ministerial
Conference. First examining the process ofadoption that is the records of negotiation on thesaid Declaration, the following is the fundamental
problem with the relationship between theprotection of pharmaceutical inventions by patentrights under the TRIPS Agreement and the
management of the public health problem: Under
the current TRIPS Agreement, when a WTO
Member intends to take measures such as the grantof compulsory licenses and parallel import for the
purpose of enabling the supply of urgently needed
and important pharmaceutical products, it is notclear whether these measures constitute violationof the obligations under the Agreement, and thesemeasures are liable to be exposed to pressure fromthe relevant trading partners, including complaints
under the DSU. The factors of the TRIPS
Agreement that create this situation are as follows:(1) There is no clear definition of the scope of
exceptions and limitations to the exclusive rights
conferred by a patent right as provided under
Article 30; (2) It is unclear what constitutes an
emergency or public non-commercial use that does
not require the prior authorization of the patent
holder, as referred to in Article 31 (b); (3) Members
recognize international exhaustion differently as it
relates to parallel import; (4) When Members
lacking the ability to manufacture pharmaceuticalproducts
importlower-priced
generic
pharmaceuticals manufactured under a compulsory
license from other Members since there are nodomestic pharmaceutical companies to which acompulsory license can be granted, the products
manufactured under the compulsory license may

conflict with Article 31 (f)—products manufactured
under a compulsory license are “predominantly” forthe supply of the domestic market.
Contrary to this, paragraphs 4 and 5 of the
Ministerial Declaration set the principle ofinterpreting each provision of the TRIPS
Agreement in light of the provisions of the object
and purpose of the Agreement or in a manner
supportive to the protection of the public health of
the Members, and it clearly specifies that Members
have the discretion to grant a compulsory license
and to establish their own regime for international
exhaustion. Paragraph 6 instructs the TRIPS
Council to find a solution to improve access topharmaceutical products for Members lacking theability to manufacture pharmaceutical products. In
this way, the said Declaration is considered to have
solved the above-mentioned problems with the
TRIPS Agreement to a certain extent and toinclude the contents that give importantsuggestions to future interpretation.
Then, evaluating the legal nature of the
Declaration in light of the rules of interpretation
under the Vienna Convention on the Law ofTreaties, the Declaration falls under “subsequent
agreement” among Members that possesses anauthority extremely close to the authoritativeinterpretation of the WTO, and also falls under“subsequent practice” and a declaration of politicalintentions. Therefore, the Declaration is adocument that can be cited by Members, the panelor the Appellate Body in the DSU proceedings, andthus can be evaluated as having the possibility ofgreatly influencing the future implementation of the
TRIPS Agreement.
Lastly examined is the reach of the
discussions on the protection of pharmaceuticalinventions by patent rights through theimplementation of the Declaration. The TRIPS
Council made decisions on the extension of thetransition period for least-developed country
Members and the establishment of a new system toconfirm the compliance of developed country
Members with obligations regarding the provisionof incentives to promote the transfer oftechnology.(*6) In addition, regarding the difficulties
that Members lacking the ability to manufacture
pharmaceutical products are facing in respect to
Article 31 (f), which is stated in Paragraph 6 of the
Declaration, the TRIPS Council discussed atransitional plan,(*7) which is the formation of apipeline for the export and import of specificgeneric pharmaceuticals in which information is(*6) The decision to extend the transitional period for LDC is the Extension of the Transition Period under Article 66.1 of the
TRIPS Agreement for Least-Developed Country Members for Certain obligations with Respect to Pharmaceutical Products,
IP/C/25, June 2002. In addition, the decision regarding the promotion of transfer of technology is the Implementation of
Article 66.2 of the TRIPS Agreement: Decision of the Council for TRIPS of 19 February 2003, IP/C/28, 20 February 2003.
(*7) Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health -- Note from the Chairman,
JOB (02)/217, 16 December 2002.

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concentrated on the WTO, on the assumption of theamendment of Article 31 (f). The discussion again
paused interpretative questions as follows: whether
the Declaration covers only countermeasuresagainst infectious diseases taken by Members
lacking the ability to manufacture pharmaceuticalproducts or also more generally covers measuresnecessary for the protection of public health taken
by all Members and if so to what extent, and how
the provisions of the object and purpose of the
TRIPS Agreement are specifically applied.
Regarding the scope of the subject of the
Declaration, from the wording of the Declarationand the records of negotiation, Members are clearlyconsidered to have been oriented toward a moregeneral reference of the scope, but it requires
further examination in consideration of the effects
on the pharmaceutical industry.

Ⅳ Conclusion
The interpretation of the TRIPS Agreement isin the process of progressive development, and the
WTO Members are proceeding with finding abalance between the protection of pharmaceuticalinventions by patent rights and the social need touse inventions, on the international plane called the
TRIPS Agreement. There is the possibility that theAgreement will progressively develop its
interpretations based on agreements between
Members with the Doha Declaration as a turning
point and will form an international system that isdifferent from the one expected when theAgreement was concluded. However, this is only apossibility, and it is important to verify theeffectiveness of each agreement and practice fromthe standpoint of international law.

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