article 31 of the trips agreement

Ending the European Union opt-out from Article 31bis of the TRIPS Agreement

Question for written answer  E-000463/2021 to the Commission Rule 138 Marc Botenga (The Left), Kateřina Konečná (The Left), Clare Daly (The Left), Mick Wallace (The Left), Manuel Bompard (The Left), Niyazi Kizilyürek (The Left), Manon Aubry (The Left), Pernando Barrena Arza (The Left), Petros Kokkalis (The Left), Dimitrios Papadimoulis (The Left), Martina Michels (The Left), Anne-Sophie Pelletier (The Left), Nikolaj Villumsen (The Left), Giorgos Georgiou (The Left), Eugenia Rodríguez Palop (The Left)

The EU Action Plan on Intellectual Property acknowledges the importance of compulsory licensing. In 2017, an amendment to Article 31bis of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) introduced a waiver of the export restriction on medicines manufactured under compulsory licence. The European Union and its Member States opted out of this clause, and are hence ineligible to import medicines manufactured under compulsory licences. On 7 April 2020, over 30 groups and 36 experts asked WTO members concerned ‘to notify the WTO that they have changed their policy and now considers itself an eligible importing country, and in addition, to also use whatever legal means are available to revoke the opt-out as importing members, for goods manufactured under a compulsory licence [1] ’.

• 1. Given the lack of production capacity of COVID-19 vaccine patent owners and manufacturing capacity in Member States, is the Commission considering ending the opt-out, thus facilitating the import of goods manufactured under compulsory licence?
• 2. Is the Commission considering derogations from EU data and market exclusivity rules delaying the effect of compulsory licences for medicinal products within the European Union?
• 3. What principles underlie the emergency coordination mechanism which the Commission envisages could be triggered at short notice when Member States consider a compulsory licence?
• [1]  https://www.keionline.org/32707 (https://www.keionline.org/32707)

The Proposed TRIPS Compromise Risks Setting Several Bad Precedents

By James Love

On March 15, 2022, STAT published text of a proposed compromise at the World Trade Organization (WTO) to temporarily relax global standards for intellectual property for COVID-19. The original proposal tabled by India and South Africa in 2020 as IP/C/W/669 would have waived 40 articles of the WTO Trade Related Agreement on Intellectual Property Rights, known as the TRIPS.

The proposed compromise would allow for “the use of patented subject matter required for the production and supply of COVID-19 vaccines without the consent of the right holder to the extent necessary to address the COVID-19 pandemic, in accordance with the provisions of Article 31 of the Agreement, as clarified and waived.” In short, the compromise only waives a single 20-word paragraph in one article: the one dealing with exports under a non-voluntary authorization.

In general, there are no legal benefits to the proposal. Countries can already export a non-predominant share of vaccine production under the TRIPS agreement, with mechanisms that are broader regarding both exports and imports, available regardless of the technology, and permanent.

This note focuses on the practical risks the proposed agreement presents as a precedent.

In this compromise, there is a deliberate effort to create some ambiguity over what is “waived” and what is “clarified,” particularly for persons without technical expertise in the WTO’s TRIPS rules. I would put the provisions impacted by the text into two categories:

• Provisions that restate existing TRIPS rules as they relate to Articles 31 (“Other Use Without Authorization of the Right Holder”) and 39 (which concerns “Protection of Undisclosed Information”).
• Article 31.f of the TRIPS. The text waives this provision on exports under a non-voluntary authorization, subject to limitations on geography (eligible countries are defined as developing countries minus China), disease (COVID-19), technology (vaccines only), time (temporary, with the time period to be determined later), and conditions, including new obligations to list patents, notify the WTO and provide details of the use of the waiver, and obligations to prevent re-exportation of products, even when the exports would be lawful in the importing country .

I have discussed the problems with the obligation to list vaccine patents here , and described the waiver proposal as worse than four other existing exceptions in the TRIPS for exports here .

The risks the proposal presents are twofold, (1) the normalization of several TRIPS+ conditions on non-voluntary authorizations that collectively are restrictive, burdensome, and protectionist, and (2) the risk that the “clarifications” of existing flexibilities in the TRIPS are a special case, only for emergencies, COVID-19, vaccines, or this temporary mechanism.

Bad precedents from proposed limitations and conditions on non-voluntary authorizations

Requirement to list the specific patents . The new obligations for listing of patents were not included in the original TRIPS for good reason. The United States, the United Kingdom, and many other countries do not have this obligation in their government/Crown use statutes, and in the case of complex biomedical inventions, where patent landscapes are often subject to non-disclosure agreements, changing over time, and controversial as to their scope, relevance, and validity, it is a consequential and objectionable requirement. More on this topic here .

Notifications to the WTO. The requirement for detailed notifications to the WTO forces health authorities to engage Ministers of Trade and Foreign Affairs. This requirement can be a deal breaker in the many countries where different philosophies and missions clash, and where raising the authorization to a trade issue might increase the fear that non-voluntary authorizations have a global political cost.

Anti-diversion obligations . The anti-diversion obligations undermine legitimate parallel trade, when the products are otherwise legal in the importing country. Such obligations are unnecessary when a government is keen to acquire vaccines that are both affordable and scarce, and when the vaccine manufacturer has the ability to enforce intellectual property rights, if any, in importing countries. Article 6 of the TRIPS states that “the exhaustion of intellectual property rights” is left to “each Member free to establish its own regime for such exhaustion without challenge,” a topic that was front and center of the 1998 to 2001 litigation between drug companies and South Africa. The proposed compromise text, which only applies to developing countries, would be applied even when the compulsory license was used on a single input of vaccine. Vaccines are particularly vulnerable to infringement claims from third parties, such as the patent on use of biodegradable lipids that Alynlam claims is infringed by Moderna for its mRNA vaccine, and this would also be an issue if a compulsory license was granted for the patents on the CPG 1018 adjuvant that is used in the Baylor vaccines. If this becomes a precedent extended to treatments for cancer or other cases, it would more broadly undermine Article 6 of the TRIPS.

Geographic restrictions on both imports and exports . There are no restrictions on which countries can export under a compulsory license in the TRIPS agreement. The only restrictions on which countries can import in the TRIPS agreement are found in the amendment Article 31bis, which gives WTO members the option to “opt out” of the special 31bis mechanism as importers, either for emergencies or more generally. The proposed compromise is more restrictive than the TRIPS in that the only countries that can import or export are developing countries, less China. Any restrictions on exports during a pandemic are problematic, particularly when the biggest problem is the exact opposite, the blocking of exports of COVID-19 countermeasures. The geographic restrictions on imports in 31bis have been criticized as protectionist, because they prevent manufacturers from benefiting from economies of scale, which could mean they would have to charge higher prices or forego production altogether. It is unlikely that the current compromise proposal will even be utilized, if adopted, but the text is not unimportant if it further normalizes restrictions on the exports under a compulsory license to higher income countries, even when a product is not infringing in either country.

The notion that certain TRIPS flexibilities are exceptional to the COVID-19 crisis

There are several provisions in the proposed compromise which only restrain existing flexibilities in the TRIPS. For example, the proposal states that:

• Governments can forgo prior negotiations with patent holders,
• A country “may issue a single authorization to use the subject matter of multiple patents” for a vaccine,
• Actions can be taken through legislative acts, executive orders, emergency decrees, and judicial or administrative orders,
• Remuneration “can take account of the humanitarian and not-for-profit purpose of specific vaccine distribution program” and “existing good practices in instances of national emergencies, pandemics, or similar circumstances,” and
• Nothing in Article 39.3 of the Agreement shall prevent a Member from taking measures necessary to enable the effectiveness of any authorization issued as per this Decision.

All of these clarifications of existing flexibilities in the TRIPS may provide the illusion of comfort for the COVID-19 pandemic, but they also run the risk of being later held out as an exception, not so much in a legal sense, but in a consequential political sense. One previous example of this occurring is from the first paragraph of the 2001 Doha Declaration on TRIPS and Public Health, which states, “We recognize the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.” This clause is frequently used to claim that the access-expanding paragraphs 4 through 7 of the same declaration only applied to “HIV/AIDS, tuberculosis, malaria and other epidemics,” including the paragraph 5 “clarifications” of flexibilities in compulsory licensing and parallel trade.

Concluding comments

It is possible that there will be no actual COVID-19 vaccine cases where the proposed compromise will be useful at all, given its temporary nature, the existing flexibilities in the TRIPS, and the superior alternatives already available for exporting under a compulsory license. That said, the proposal introduces precedents that will be used to justify further narrowing of TRIPS flexibilities, and risks that the most neutral clarifications of existing flexibility will be spun by drug companies and their advocates in producing countries as special, rather than general, and not be used outside of an emergency or COVID-19, or for anything other than vaccine.

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Understanding Article 31(f) of the TRIPS Agreement: Key Legal Insights

The power of article 31(f) of the trips agreement.

As a legal professional, the intricacies of international trade law never fail to fascinate me. One particularly intriguing aspect is Article 31(f) of the TRIPS Agreement. This provision holds great significance in the realm of intellectual property rights and access to essential medicines, making it a crucial area of study for anyone passionate about global health and justice.

Basics Article 31(f)

Article 31(f) of the TRIPS Agreement pertains to the export of pharmaceutical products produced under a compulsory license. It sets forth the condition that such products can only be exported to countries that have insufficient or no manufacturing capacity for the required pharmaceutical products. This provision aims to strike a balance between protecting intellectual property rights and ensuring access to affordable medicines, particularly in developing countries.

Case Studies

To illustrate the real-world impact of Article 31(f), let`s delve into a few notable case studies:

While Article 31(f) has undoubtedly made strides in improving access to essential medicines, there is still much work to be done. As we navigate the complexities of global trade and public health, it is vital for legal professionals and policymakers to continue exploring innovative solutions that uphold intellectual property rights while prioritizing the well-being of vulnerable populations.

Article 31(f) of the TRIPS Agreement stands as a testament to the potential of international law to promote equity and social justice. Its impact on the availability of essential medicines around the world is undeniable, and I am eager to witness how its application will continue to evolve in the years to come.

Understanding Article 31(f) of the TRIPS Agreement: A Legal Contract

Welcome to the legal contract for understanding Article 31(f) of the TRIPS Agreement. This contract is designed to provide a comprehensive understanding of the legal implications and requirements of Article 31(f) in the context of intellectual property rights and international trade. Please read the following terms and conditions carefully before proceeding.

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AMENDED TRIPS AGREEMENT

• Annex and Appendix to the TRIPS Agreement
• PART I General Provisions and Basic Principles
• PART II Standards Concerning the Availability, Scope and Use of Intellectual Property Rights
• 1. Copyright and Related Rights
• 2. Trademarks
• 3. Geographical Indications
• 4. Industrial Designs
• 6. Layout-Designs (Topographies) of Integrated Circuits
• 7. Protection of Undisclosed Information
• 8. Control of Anti-Competitive Practices in Contractual Licences
• PART III Enforcement of Intellectual Property Rights
• 1. General Obligations
• 2. Civil and Administrative Procedures and Remedies
• 3. Provisional Measures
• 4. Special Requirements Related to Border Measures
• 5. Criminal Procedures
• PART IV Acquisition and Maintenance of Intellectual Property Rights and Related Inter-Partes Procedures
• PART V Dispute Prevention and Settlement
• PART VI Transitional Arrangements
• PART VII Institutional Arrangements; Final Provisions

ANNEX TO THE TRIPS AGREEMENT 

1. For the purposes of Article 31 bis and this Annex:

(a) “pharmaceutical product” means any patented product, or product manufactured through a patented process, of the pharmaceutical sector needed to address the public health problems as recognized in paragraph 1 of the Declaration on the TRIPS Agreement and Public Health (WT/MIN(01)/DEC/2). It is understood that active ingredients necessary for its manufacture and diagnostic kits needed for its use would be included (1) ;   

(b) “eligible importing Member” means any least-developed country Member, and any other Member that has made a notification (2) to the Council for TRIPS of its intention to use the system set out in Article 31 bis and this Annex (“system”) as an importer, it being understood that a Member may notify at any time that it will use the system in whole or in a limited way, for example only in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. It is noted that some Members will not use the system as importing Members (3) and that some other Members have stated that, if they use the system, it would be in no more than situations of national emergency or other circumstances of extreme urgency;   

(c) “exporting Member” means a Member using the system to produce pharmaceutical products for, and export them to, an eligible importing Member.

2. The terms referred to in paragraph 1 of Article 31 bis are that:

(a) the eligible importing Member(s) (4) has made a notification (2) to the Council for TRIPS, that:   

(i) specifies the names and expected quantities of the product(s) needed (5) ;   

(ii) confirms that the eligible importing Member in question, other than a least developed country Member, has established that it has insufficient or no manufacturing capacities in the pharmaceutical sector for the product(s) in question in one of the ways set out in the Appendix to this Annex; and   

(iii) confirms that, where a pharmaceutical product is patented in its territory, it has granted or intends to grant a compulsory licence in accordance with Articles 31 and 31 bis of this Agreement and the provisions of this Annex (6) ;   

(b) the compulsory licence issued by the exporting Member under the system shall contain the following conditions:   

(i) only the amount necessary to meet the needs of the eligible importing Member(s) may be manufactured under the licence and the entirety of this production shall be exported to the Member(s) which has notified its needs to the Council for TRIPS;   

(ii) products produced under the licence shall be clearly identified as being produced under the system through specific labelling or marking. Suppliers should distinguish such products through special packaging and/or special colouring/shaping of the products themselves, provided that such distinction is feasible and does not have a significant impact on price; and   

(iii) before shipment begins, the licensee shall post on a website (7) the following information:   

— the quantities being supplied to each destination as referred to in indent (i) above; and   

— the distinguishing features of the product(s) referred to in indent (ii) above;   

(c) the exporting Member shall notify (8) the Council for TRIPS of the grant of the licence, including the conditions attached to it. (9) The information provided shall include the name and address of the licensee, the product(s) for which the licence has been granted, the quantity(ies) for which it has been granted, the country(ies) to which the product(s) is (are) to be supplied and the duration of the licence. The notification shall also indicate the address of the website referred to in subparagraph (b)(iii) above.

3. In order to ensure that the products imported under the system are used for the public health purposes underlying their importation, eligible importing Members shall take reasonable measures within their means, proportionate to their administrative capacities and to the risk of trade diversion to prevent re-exportation of the products that have actually been imported into their territories under the system. In the event that an eligible importing Member that is a developing country Member or a least-developed country Member experiences difficulty in implementing this provision, developed country Members shall provide, on request and on mutually agreed terms and conditions, technical and financial cooperation in order to facilitate its implementation.

4. Members shall ensure the availability of effective legal means to prevent the importation into, and sale in, their territories of products produced under the system and diverted to their markets inconsistently with its provisions, using the means already required to be available under this Agreement. If any Member considers that such measures are proving insufficient for this purpose, the matter may be reviewed in the Council for TRIPS at the request of that Member.

5. With a view to harnessing economies of scale for the purposes of enhancing purchasing power for, and facilitating the local production of, pharmaceutical products, it is recognized that the development of systems providing for the grant of regional patents to be applicable in the Members described in paragraph 3 of Article 31 bis should be promoted. To this end, developed country Members undertake to provide technical cooperation in accordance with Article 67 of this Agreement, including in conjunction with other relevant intergovernmental organizations.

6. Members recognize the desirability of promoting the transfer of technology and capacity building in the pharmaceutical sector in order to overcome the problem faced by Members with insufficient or no manufacturing capacities in the pharmaceutical sector. To this end, eligible importing Members and exporting Members are encouraged to use the system in a way which would promote this objective. Members undertake to cooperate in paying special attention to the transfer of technology and capacity building in the pharmaceutical sector in the work to be undertaken pursuant to Article 66.2 of this Agreement, paragraph 7 of the Declaration on the TRIPS Agreement and Public Health and any other relevant work of the Council for TRIPS.

7. The Council for TRIPS shall review annually the functioning of the system with a view to ensuring its effective operation and shall annually report on its operation to the General Council.

APPENDIX TO THE ANNEX TO THE TRIPS AGREEMENT 

Assessment of Manufacturing Capacities in the Pharmaceutical Sector

Least-developed country Members are deemed to have insufficient or no manufacturing capacities in the pharmaceutical sector.

For other eligible importing Members insufficient or no manufacturing capacities for the product(s) in question may be established in either of the following ways:

(i) the Member in question has established that it has no manufacturing capacity in the pharmaceutical sector;   

or   

(ii) where the Member has some manufacturing capacity in this sector, it has examined this capacity and found that, excluding any capacity owned or controlled by the patent owner, it is currently insufficient for the purposes of meeting its needs. When it is established that such capacity has become sufficient to meet the Member's needs, the system shall no longer apply.

• This subparagraph is without prejudice to subparagraph 1(b). back to text
• It is understood that this notification does not need to be approved by a WTO body in order to use the system.   back to text
• Australia, Canada, the European Communities with, for the purposes of Article 31 bis and this Annex, its member States, Iceland, Japan, New Zealand, Norway, Switzerland, and the United States.   back to text
• Joint notifications providing the information required under this subparagraph may be made by the regional organizations referred to in paragraph 3 of Article 31 bis on behalf of eligible importing Members using the system that are parties to them, with the agreement of those parties.   back to text
• The notification will be made available publicly by the WTO Secretariat through a page on the WTO website dedicated to the system.   back to text
• This subparagraph is without prejudice to Article 66.1 of this Agreement.   back to text
• The licensee may use for this purpose its own website or, with the assistance of the WTO Secretariat, the page on the WTO website dedicated to the system.   back to text
• The notification will be made available publicly by the WTO Secretariat through a page on the WTO website dedicated to the system.   back to tex

> Explanatory note

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The texts reproduced in this section do not have the legal standing of the original documents which are entrusted and kept at the WTO Secretariat in Geneva.

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