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Association of International Business Lawyers Parallel imports of patented products: A non-exhaustive trip through Association of International Business Lawyers Parallel imports of patented products: A non-exhaustive trip through TRIPS, GATT and Switzerland Daniel Kraus Attorney-at-Law, LL. M Geneva, 25 October 2002 © Daniel Kraus 2002

What is today’s subject about? ? ! • Parallel imports: importation of a protected What is today’s subject about? ? ! • Parallel imports: importation of a protected product which has been put on a foreign market by the right holder, or with his approval. Country A CHF 10. CHF 8. - Country B CHF 5. -

What is it all about? ? • Clic-clac. . . • «Cash» : Savings What is it all about? ? • Clic-clac. . . • «Cash» : Savings on: - Bicycles - Swatches : 7% : 8% - Furniture : 26. 3% - Washing machine : 161% !!? Source: Cash, N° 44, 2 November 2002. Prices as compared to Germany.

The economics of parallel imports • Patent holder ’s interest: - R&D • Consumer’s The economics of parallel imports • Patent holder ’s interest: - R&D • Consumer’s interest: - cheap products - good products! • Industrialized countries interest/ • Developing countries interest: - employement - investments $ - distribution of products

Interest mix! Interest mix!

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

Different types of exhaustion • National • International • Regional • . . . Different types of exhaustion • National • International • Regional • . . . and?

Has the subject not yet been exhausted? ? ! • At the international level: Has the subject not yet been exhausted? ? ! • At the international level: TRIPS Article 6 • At the national level: Trademarks International exhaustion Copyright International exhaustion Patents National exhaustion © Daniel Kraus 2002

The WTO house, TRIPS and GATT Ministerial Conference Trade Policy Review Other committees (e. The WTO house, TRIPS and GATT Ministerial Conference Trade Policy Review Other committees (e. g. environmt GATT Council (goods)) Committees General Council TRIPSCouncil Dispute settlement Body GATS Council (services) Committees Plurilateral agreements

The TRIPS Agreement • • • Minimum Standards General IP provisions (MFN, NT, art. The TRIPS Agreement • • • Minimum Standards General IP provisions (MFN, NT, art. 6 -8) Specific IP provisions (copyright and neighbouring rights; trademarks, geographical indications; industrial designs; IC circuits; undisclosed information; patents).

The TRIPS Agreement • • • Article 6 MFN/NT according to TRIPS Article 27: The TRIPS Agreement • • • Article 6 MFN/NT according to TRIPS Article 27: product differentiation? No Article 28: right of importation = ? Doha? - Freedom! - First step towards discrimination? The TRIPS Agreement is - unfortunately - of no guidance

What about the GATT? • Does it apply? • Blocking parallel imports = Measure 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 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) 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 solution

Conclusion • The TRIPS and GATT Agreements allow for a balanced solution - at Conclusion • The TRIPS and GATT Agreements allow for a balanced solution - at the international level and - at the national level. • No room for dogmatism!

Thanks for your attention! Thanks for your attention!

Questions? Questions?