WTO Appellate Body Rules that Canada's 17 Year Patent Term Violates TRIPS

(September 19, 2000) The WTO Appellate Body upheld a dispute resolution panel decision that the section of the Canadian Patent Act which provides for a term of 17 years from the date of issuance violates Canada's obligations under the TRIPS Agreement.

The World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement provides for patents terms of 20 years from the date of filing. However, the Canadian Patent Act provides that the term of patents based on applications filed before October 1, 1989, is 17 years from the date that the patent is issued.

The U.S. complained to the WTO. On May 5, 2000 a dispute resolution panel agreed with the U.S.  Canada appealed. On September 18 the WTO Appellate Body affirmed the decision of the dispute resolution panel.

USTR Charlene Barshefsky

"The merits of this dispute have long been clear: Canada must provide 20 years of patent protection, as required by the TRIPS Agreement," said USTR Charlene Barshefsky in a press release. "We expect Canada to comply promptly and fully with this ruling."

The Canadian Patent Act provides for terms of 20 years from the date of application for patents issued since 1989. However, for patents issued before November 1, 1989, the term is only 17 years from the date of issuance of the patent. These are sometimes referred to as "Old Act" patents.

Article 33 of the TRIPS Agreement states that "The term of protection available shall not end before the expiration of a period of twenty years counted from the filing date."

The Canadian patent office estimates that when the TRIPS agreement took effect in Canada in 1996 there were 236,431 Old Act patents. Of these, 142,494 had terms that would not, assuming that annual maintenance fees were paid, expire until, or until well after, the expiration of the 20-year period. Conversely, 93,937 of the Old Act patents then in existence had terms that would, assuming the payment of annual maintenance fees, expire in less than the 20 year period measured from their application dates.

The U.S. challenged Section 45 of Canada's Patent Act on the basis that the patent protection term of 17 years from the date of grant for those patent applications that were filed before October 1989 often ends before 20 years from the date of filing. The U.S. argued that pursuant to Articles 33 and 70.2 of the TRIPS Agreement, Canada is required to make available a term of protection that does not end before 20 years from the date of filing to all inventions which enjoyed patent protection on January 1, 1996, including those protected by Old Act.

Canada argued that its Patent Act is equivalent or superior to, and is consistent and in conformity with, the term of patent protection described by Article 33. It also argued that the TRIPS Agreement is not retroactive to patents issued prior to January 1, 1996.

The Dispute Resolution Panel agreed with the U.S. position, that Article 33 does apply retroactively to Canada's "Old Act" patents, and that Canada's patent term for these "Old Act" patents violates Article 33. Consequently, the Panel required Canada to bring its patent term for "Old Act" patents into conformity with the TRIPS Agreement.

On September 18, 2000 the Appellate Body upheld the Panel both as to the retroactive application of the TRIPS Agreement, and as to the term length.

The Appellate Body was comprised of Julio Lacarte-Muró, James Bacchus, and A.V. Ganesan.

Case Chronology:

• Nov. 17, 1987. An Act to amend the Patent Act and to provide for certain matters in relation thereto (aka Bill C-22) became law.
• Oct. 1, 1996. The TRIPS Agreement took effect in Canada.
• May 6, 1999. The U.S. requested consultations with Canada regarding its patent term statute.
• June 11, 1999. The U.S. and Canada met in Geneva, but reached no agreement.
• July 15, 1999. The U.S. requested that the Dispute Settlement Body (DSB) establish a panel.
• Sept. 22, 1999. The WTO DSB established a Dispute Resolution Panel to review this issue.
• Oct. 22, 1999. The Director-General appointed the three member Panel: Stuart Harbinson (Chairman), Sergio Escudero, and Alberto Heimler.
• Dec. 20, 1999. The Panel met with the parties.
• Jan. 25, 2000. The Panel met with the parties.
• March 3, 2000. The Panel issued its interim report.
• March 31, 2000. The Panel submitted its final report to the parties.
• May 5, 2000. The Panel released its final report.
• June 19, 2000. Canada filed an appeal with the WTO Appellate Body.
• Aug. 1, 2000. Oral argument before the WTO Appellate Body.
• Sept. 18, 2000. The WTO Appellate Body upheld the Panel.