Association of International Business Lawyers

Parallel imports of patented products: Parallel imports of patented products: A non-exhaustive trip through TRIPS, A non-exhaustive trip through TRIPS,

GATT and SwitzerlandGATT and Switzerland

Daniel KrausAttorney-at-Law, LL.M

Geneva, 25 October 2002© Daniel Kraus 2002

Country A Country B

CHF 10.- CHF 5.-

What is today’s subject about??!

CHF 8.-

• Parallel imports: importation of a protected product which has been put on a foreign market by the right holder, or with his approval.

What is it all about??

• «Cash»:Savings on:

Source: Cash, N° 44, 2 November 2002. Prices as compared to Germany.

- Bicycles : 7%

- Swatches : 8%

- Furniture : 26.3%

- Washing machine : 161% !!?

• Clic-clac...

The economics of parallel imports• Patent holder ’s interest:Patent holder ’s interest:

- R&D

• Consumer’s interest:Consumer’s interest:- cheap products- good products!

• Industrialized countries interest/ Industrialized countries interest/

• Developing countries interest:Developing countries interest:

- employement

- investments $- distribution of products

Interest mix!

Definition of Exhaustion

Once a product protected by an IP right has Once a product protected by an IP right has been marketed by the IP right holder or by been marketed by the IP right holder or by others with his consent, the IP rights of others with his consent, the IP rights of commercial exploitation over this given commercial exploitation over this given product can no longer be exercised by the product can no longer be exercised by the right holder, as they are “exhausted”*.right holder, as they are “exhausted”*.

*WIPO

Different types of exhaustion

• International

• ...and?

• National

• Regional

Has the subject not yet been exhausted??!Has the subject not yet been exhausted??!

• At the international level:At the international level:TRIPS Article 6

• At the national level:At the national level:Trademarks International exhaustionCopyright International exhaustionPatents National exhaustion

© Daniel Kraus 2002

The WTO house, TRIPS and GATT

Ministerial Conference

GATT Council(goods))

General Council

TRIPS-Council

GATSCouncil

(services)

Dispute settlementBody

Trade Policy Review

Committees Committees

Pluri-lateral agree-ments

Other commit-

tees(e.g.

environmt

The TRIPS Agreement

• Minimum StandardsMinimum Standards

• General IP provisions (MFN, NT, art. 6-8)General IP provisions (MFN, NT, art. 6-8)

• Specific IP provisions (copyright and Specific IP provisions (copyright and neighbouring rights; trademarks, neighbouring rights; trademarks, geographical indications;industrial geographical indications;industrial designs; IC circuits; undisclosed designs; IC circuits; undisclosed information; patents).information; patents).

The TRIPS Agreement

The TRIPS Agreement is - unfortunately - of no guidance

• Article 6• MFN/NT according to TRIPS• Article 27: product differentiation? No• Article 28: right of importation = ?• Doha? - Freedom!

- First step towards discrimination?

What about the GATT?

• Does it apply?

• Blocking parallel imports = Measure of equivalent effect to a trade barrier (art. XI)

• MFN/NT according to GATT

• Art. XX: General exception

• (Art. XXIV: regional agreements)

General exceptions: art. XX GATT• XX:d conditions:

- necessity- compatibility with GATT

• «Chapeau» conditions:- no discrimination- no disguised restriction on trade- what are the «prevailing conditions»?

GATT: If does not apply - not an obstacle.If does apply - allows wide exceptions.

Does this apply to Switzerland?

• No direct effect

• But «consistent interpretation» (Cottier)• The choice is a political one:

- Patent law or Competition law (LCart)?- National, international or regional exhaustion?

TRIPS/GATT allow for a balanced solutionTRIPS/GATT allow for a balanced solution

Conclusion

• The TRIPS and GATT Agreements allow for a The TRIPS and GATT Agreements allow for a balanced solutionbalanced solution

- at the international level and- at the international level and- at the national level.- at the national level.

• No room for dogmatism!No room for dogmatism!

Thanks for your attention!

Questions?