WORLD TRADE                          WT/DS114/R
         ORGANIZATION                         17 March 2000
                                              (00-1012)
                                              Original: English
         CANADA – PATENT PROTECTION OF PHARMACEUTICAL
                             PRODUCTS
                  Complaint by the European Communities and their member States
                           Report of the panel
         The report of the Panel on Canada – Patent Protection of Pharmaceutical Products is being circulated
         to all Members, pursuant to the DSU. The report is being circulated as an unrestricted document from
         17 March 2000 pursuant to the Procedures for the Circulation and Derestriction of WTO Documents
         (WT/L/160/Rev.1). Members are reminded that in accordance with the DSU only parties to the
         dispute may appeal a panel report, an appeal shall be limited to issues of law covered in the panel
         report and legal interpretations developed by the panel, and that there shall be no  ex parte
         communications with the panel or Appellate Body concerning matters under consideration by the
         panel or Appellate Body.
         Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the
         date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report.
         If the Panel Report is appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the
         completion of the appeal. Information on the current status of the Panel Report is available from the WTO Secretariat.
                                                                                                                    WT/DS114/R
                                                                                                                             Page i
                                                            TABLE OF CONTENTS
                   I.       INTRODUCTION                                                                                        1
                   II.      FACTUAL ASPECTS                                                                                     1
                            (a)      Relevant Provisions of Canadian Patent Law                                                  1
                            (b)      Canada's Regulatory Review System for Drugs                                                 3
                   III.     FINDINGS AND RECOMMENDATIONS REQUESTED BY THE PARTIES                                               7
                   IV.      ARGUMENTS OF THE PARTIES                                                                            9
                   A.       EUROPEAN COMMUNITIES AND THEIR MEMBER STATES                                                         9
                   (1)      SECTION 55.2(2) AND 55.2(3) OF THE PATENT ACT TOGETHER
                            WITH THE MANUFACTURING AND STORAGE OF PATENTED
                            MEDICINES REGULATIONS                                                                               9
                            (a)      Article 28.1 and Article 33 of the TRIPS Agreement                                          9
                            (b)      Article 27.1 of the TRIPS Agreement                                                       10
                   (2)      SECTION 55.2(1) OF THE PATENT ACT                                                                  10
                            (a)      Article 28.1 of the TRIPS Agreement                                                       10
                            (b)      Article 27.1 of the TRIPS Agreement                                                       12
                   (3)      HISTORICAL DEVELOPMENTS IN CANADIAN PATENT LEGISLATION AND
                            COMPARISON BETWEEN THE SITUATION IN CANADA BEFORE AND AFTER
                            THE INTRODUCTION OF BILL C-91 AND THE MANUFACTURING AND
                            STORAGE OF PATENTED MEDICINES REGULATIONS IN 1993                                                  12
                   (4)      ECONOMIC LOSSES SUFFERED BY THE EU PHARMACEUTICAL INDUSTRY                                         15
                   (5)      ARTICLE 30 OF THE TRIPS AGREEMENT                                                                  16
                   B.       CANADA                                                                                              16
                   (1)      ARTICLE 30 OF THE TRIPS AGREEMENT                                                                  16
                            (a)      Object, Purpose and Meaning                                                               18
                                     (i)      Section 55.2(1) and 55.2(2) create limited exceptions                            21
                                     (ii)     Section 55.2(1) and 55.2(2) do not conflict with a normal
                                              exploitation of the patent                                                       24
                                     (iii)    Section 55.2(1) and 55.2(2) do not prejudice the legitimate
                                              interests of the patent owner                                                    24
                                     (iv)     Section 55.2(1) and 55.2(2) take account of the legitimate
                                              interests of third parties                                                       25
                            (b)      Travaux Préparatoires and Subsequent Practice                                             27
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                 (2)     ARTICLE 27.1 OF THE TRIPS AGREEMENT                                                     30
                         (a)     Object, Purpose and Meaning                                                      30
                         (b)     Travaux Préparatoires and Subsequent Practice                                    31
                         (c)     Section 55.2(1) and 55.2(2) are not Discriminatory                               32
                 (3)     ARTICLE 33 OF THE TRIPS AGREEMENT                                                       33
                         (a)     Object, Purpose and Meaning                                                      33
                         (b)     Section 55.2(1) and 55.2(2) do not Reduce the Required Minimum
                                 Term of Protection                                                               34
                 (4)     THE LEGISLATIVE HISTORY OF THE DISPUTED PROVISIONS, THEIR
                         FRAMING, THEIR LEGISLATIVE CONTEXT AND THE DEBATE ON
                         COST CONTAINMENT AND GENERIC DRUGS                                                      34
                         (a)     The Legislative History of the Disputed Provisions                               35
                         (b)     The Framing of the Disputed Provisions                                           37
                         (c)     The Legislative Context                                                          39
                         (d)     Cost Containment and Generic Drugs                                               40
                 C.      EUROPEAN COMMUNITIES AND THEIR MEMBER STATES                                             45
                 (1)     ARTICLE 27.1 OF THE TRIPS AGREEMENT                                                     47
                 (2)     ARTICLE 30 OF THE TRIPS AGREEMENT                                                       49
                         (a)     Preliminary Remarks                                                              50
                                 (i)     The Preamble of the TRIPS Agreement and its Articles 1.1, 7 and 8.1     51
                         (b)     Interpretation of the Conditions Enumerated in Article 30 for the Grant of
                                 Exceptions to Rights Conferred                                                   53
                                 (i)     The "prior use" exception                                               54
                                 (ii)    The "scientific/experimental use" exception                              55
                         (c)     Section 55.2(2) and 55.2(3) of the Canadian Patent Act together with the
                                 Manufacturing and Storage of Patented Medicines Regulations                      56
                                 (i)     "Limited"                                                               56
                                 (ii)    "Do not unreasonably conflict with a normal exploitation
                                         of the patent"                                                          57
                                 (iii)   "Do not unreasonably prejudice the legitimate interests of
                                         the patent owner, taking account of the legitimate interests
                                         of third parties"                                                       58
                         (d)     Section 55.2(1) of the Canadian Patent Act                                       59
                                 (i)     "Limited"                                                               59
                                 (ii)    "Do not unreasonably conflict with a normal exploitation of
                                         the patent"                                                             59
                                 (iii)   "Do not unreasonably prejudice the legitimate interests of
                                         the patent owner, taking account of the legitimate interests
                                         of third parties"                                                       60