26th June 2001

BRAZIL-US REACH AGREEMENT IN IPR DISPUTE

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The US on 25 June announced that it would withdraw its controversial WTO challenge against Brazil’s intellectual property rights (IPR) regime (see BRIDGES Weekly, 8 May 2001). In a joint Brazil-US communication, the US for the first time acknowledged the link between the Brazilian IPR law and the fight against AIDS. The decision comes in the wake of last week’s special discussion on access to medicines at the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPs) (see related story, this issue).
At the centre of the dispute is Article 68 of Brazil’s Intellectual Property (IP) Law, which imposes “local working” requirements (i.e. the product has to be produced locally) as a condition for granting a patent in Brazil. If this condition is not met within three years, the Law allows the government to grant a compulsory licence (i.e. without the consent of the patent holder).

According to the Brazil-US communication, the US has withdrawn the WTO panel against Brazil concerning the compatibility of Brazil’s IP Law with the TRIPs Agreement. Brazil, in turn, agreed to hold prior talks with the US “in the event it deems necessary to apply Article 68 to grant compulsory licenses on patents held by US companies”. These talks would be held within the scope of a US-Brazil Consultative Mechanism, in a special session to discuss the subject. Brazil, however, has made no commitment to comply with US views in case of disagreement between the two countries over compulsory licensing.

Brazil has expressed its satisfaction with the outcome of the consultations, which followed the Brazilian proposal for settlement. According to a Brazilian trade official, this agreement will now allow the country to focus on more substantial issues regarding TRIPs provisions and public health, which some countries hope will culminate in a declaration on this issue at the next WTO Ministerial Conference in Doha, Qatar, in November. The official speculated that rather than representing a shift in the US position on TRIPs, the decision came as a result of public pressure, which had turned the case into a political burden for the US. Indeed, both countries stressed in their joint communication that the agreement was reached “without prejudice of the US and Brazil’s different interpretations of the consistency of Article 68 with the TRIPs Agreement.” The official added that it remains to be seen how the US will react when the first compulsory license is issued for a US firm under Article 68 of the IP Law.

The decision was welcomed by various NGOs who in the past had strongly criticised the US challenge. Oxfam described the settlement as the “latest victory” in the “battle to provide the world’s poorest people with access to essential medicines”, predicting that the pressure on drug companies and governments to change “rigid international patent rules” would continue to build. Médecins Sans Frontières were also pleased with the agreement, saying that Art. 68 would stimulate research and development and local production capacities, but expressed some concern about a possible shift towards dealing with these issues at the bilateral rather than at the multilateral level.

ICTSD Internal Files.