Interpreting Article 20 with Articles 7 and 8: A Holistic Approach to Patent Exceptions

11th November, 2024 - 6:51 am Categories: Patents 0 Comments

INTERPRETING ARTICLE 20 WITH ARTICLE 7 AND 8

Thus, reading Article 20 in the light of Articles 7 and 8 puts particular emphasis on the balancing of legitimate needs of patent owners with rights of WTO Members for protection towards society’s interests. However, a three-step test in Canada-Patents, sidestepping balancing assessment to the third step where it may never be satisfied, is contrary to Articles 7 and 8 and not acceptable. Instead, an overwhelming consensus exists for taking a general approach towards Article 20, which will mean the balancing evaluation plays a major role. This interpretation is found in the Australian-TPP definition of ‘unjustifiably’ under Article 20. If the same process followed with ‘unreasonably’ under Article 20 is followed, that would be to derive the ordinary meanings of the terms through dictionary definitions and further definition in Articles 7 and 8 and through the context of TRIPS.

In this interpretation, ‘unjustifiable’ means an action without good reason while ‘unreasonable’ is the description of an action not made out of reason or sound judgment. Whether ‘conflict’ and ‘prejudice’ in Article 30 are justified should therefore be determined through an adapted weighing and balancing exercise based on Article 20, which would better aim at seeing patent exceptionality with a more balanced head, taking into account the rights of the patent owners and social interests. Three considerations are essential in deciding whether using a patent incessantly would indeed fall within unreasonable conflicting activities or whether the legitimate interests of the patent owner are unreasonable prejudiced:

1. Intensity and character of the conflict to ultimately emerge from the exception towards normal exploitation of the patent. For this consideration, the degree of harm occasioned for the legitimate interests of the patent owner when it seeks to exploit its invention in the market shall be considered for an evaluation whether the patent has fulfilled its purpose.
2. The justification of the exercise of the exception, cognizant of the legal interests of other stakeholders and social values it aims to serve.
3. Whether the reasons advanced are cogent enough to vindicate the grievance and detriment suffered. While ‘unreasonably’ is used twice in Article 30, the balance test should be a single, overall examination that perceives the provision as an entirety. Fortunately, the first factor, as suggested by the Panel, takes care of the impact on rights in intellectual property and the legitimate interests of the owner of the patent. It meets with the general understanding that the provision has to be read in an integrated manner and accordingly obviates the need for redundant evaluations. Thus, this three-factor test, all things considered is a comprehensive overall article 30 analysis contains the balancing exercise that determines the effect on the intellectual property right, the proprietor of the patent and the other parties concerned.

THE EVALUATION AND EQUILIBRIUM ANALYSIS IN ARTICLE 30

Article 30 embodies inspiration from Articles 7 and 8, but leads to a critical point: an especially delicate balance of the rights of patent owners with WTO Members’ obligations to protect societal interests.

This principle is blurred by the three-step test under Canada-Patents, delaying the check on this balance to the third step and applying no scrutiny to it at all. This is contrary to the spirit of Articles 7 and 8, and an inappropriate way in which to interpret Article 30.32 A comprehensive review is therefore supported, where the provision is considered a unitary whole, with a central role for the balance of these interests. The Panel and Australia-TPP concluded that “unjustifiably” in Article 20 is pivotal for balancing. Similarly, “unreasonably” in Article 30 should be read in a similar vein to “unjustifiably” in Article 20.

To determine the ordinary meanings of the words, the Panel relies largely on dictionary definitions. Again, where necessary, it refers to Articles 7 and 8 and the broader TRIPS context, such as the Doha Declaration and the preamble.

“Unjustifiably” means that acts are just, right, or reasonable while “unjustifiable” suggests actions that are not based on reason, good sense, or sound judgment. These words point to giving good reason reasonably to justify the action. “Unjustifiably” under Article 20 is equivalent to “conflict” and “prejudice” under Article 30. Therefore, both “prejudice against the rightful interests of the patent holder” and “a conflict with the usual utilisation of the patent” can be justified. The weight and balance test for Article 20 made by the Panel may also be used for Article 30’s terms. Evaluating whether normal exploitation of a patent is reasonably conflicted and the interest of the owner of the patent is reasonably prejudiced comprise three major determinants.

1. Degree of inconsistency with customary utilisation of patents and the effect on the lawful interests of the holder.
2. Reasons for the exception, considering societal interests and legitimate third parties’ interests.
3. Assessment of whether such reasons reasonably support conflict and prejudice.

While “unreasonably” appears twice in Article 30, a single and integrated balancing test is appropriate because the provision is integrated. The first consideration of the Panel corresponds with the methodology of evaluating the provision as one single element, thus eliminating the need to run multiple tests and duly takes into consideration implications on the patent right and interests of the owner.

This three-factor balancing would lead to a full reconciliation between patent rights, patent owners, and societal interests, and thus, it comprised a wholesome evaluation of Article 30.

NATURE AND EXTENT OF CONFLICT AND PREJUDICE

The first point to address is the specific exemption and its influence on certain patents or patent categories. Nonetheless, some key points to ponder include that the primary function of the patent system is to avert market failure in generating sufficient technical knowledge.37 Thus, ‘normal exploitation’ should include measures required to remedy deficiencies in the consumer market and should not include participation by Entities outside than the consumer sector, including research institutes or philanthropic groups, that use patents for scientific or humanitarian goals. Moreover, patent rights should only cover the capacity to take advantage of a market opportunity without outside intervention, as they are a negative right that forbids others from entering the market. It doesn’t entail a guarantee of compensation for efforts or a specific return on investment. Importantly, as the Australia-TPP case showed, reasonableness can still be applied to measures that have broad effects in some situations.

Author: Kaustubh Kumar, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

REFERENCES

1. Panel Report, Australia–Certain Measures Concerning Trademarks, Geographical Indications and other Plain Packaging Requirements Applicable to Tobacco Products and Packaging, WTO Docs WT/DS435/R,WT/DS441/R, (28 June 2018) (Australia-TPP 1);
2. Oxford English Dictionary (online at 2 November 2023) ‘unreasonable’