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US to withdraw TRIPS dispute against Brazil

by Chakravarthi Raghavan

Geneva, 25 June 2001 - - The United States and Brazil were due to announce Monday an agreement for the US to withdraw its complaint against Brazil at the WTO over its patent law and provisions for compulsory licensing to secure local working.

Under the joint announcement, due to be made in Geneva and New York (where the UN General Assembly is holding a special session on AIDS) and in their capitals, Brazil is also expected to agree to hold ‘talks’ with the US before invoking its patent law provisions on this ground. Brazil will also not be proceeding with its own dispute against the United States for what it said were provisions in the US patent law similar to that in Brazil.

The US withdrawal of the complaint in effect puts an end, at least for the present, of what proved to be a high profile case that was seen as aimed at Brazil’s very successful policy of tackling HIV/AIDS and providing retrovirals for patients.

By launching the case, the US and its pharmaceutical lobby found themselves in what has proved to be a full- fledged public relations disaster - for the pharmaceutical firms for their greed, and the US government in promoting their interests about public health, and of a global pandemic.

While the expected withdrawal announcement was welcomed by health and trade experts, they underlined that so long as the provisions of the WTO’s TRIPS agreement remain as they are, and are not clarified and put beyond doubt, nothing could prevent the US, or for that matter, any other country raising similar disputes against others - when things quieten down.

The WTO’s dispute settlement body had referred the US complaint to a panel in February, but the parties were still in the stage of consultations on the panellists. The public outcry around the world against the US move, at the time of the UN Human Rights Commission meetings, forced the US administration to go slow, hoping that the public heat would dissipate and it could proceed with the case.

But since then, discussions at the Health Assembly and last week at the TRIPS Council has shown that the issue would not so easily fade away, and the US has now acted to salvage its position.

When the US took the dispute to the DSB and got a panel, Brazil sought consultations with the US over the US Patent Law which, Brazil said, had a provision similar to that of Brazil, and which required US government patents to be ‘worked’ in the United States by a licensee.

The compromise, according to Brazilian non-official sources, would involve both parties withdrawing their mutual complaints, and with some assurances from Brazil that it would take recourse to its law on a case-by-case basis and before doing so would have ‘talks’ with the United States.

The US complaint was that Art 68 of Brazil’s industrial property law had imposed a local working requirement and that there was a stipulation that a patent shall be subject to compulsory licensing if it was not worked in the territory of Brazil, and a compulsory license shall be granted on a patent if the patent is not being used to manufacture the product in Brazil or if the patented process is not used in Brazil. In the US view, these provisions were in conflict with Articles 27.1 and 28.1 of TRIPS.

The Brazilian law also provided that if a patent owner chose to exploit the patent through importation, others could either import the patented product or obtain the product from the patented process.

Brazil had contended in the DSB in February that Articles 204 and 209 of the US patent code had similar provisions and had said it would seek consultations with the US and raise a dispute over the US provisions.

The US law, among other things, provides that when any patent is obtained, as a result of a research funded by the US government and agencies, the patent should be worked in the United States and could not be licensed for production elsewhere. – SUNS4922

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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