1. Parallel imports of patented products: A non-exhaustive trip through TRIPS, GATT and Switzerland 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

2. Country ACountry 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.

3. 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...

4. 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

5. Interest mix!

6. 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

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

8. 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 exhaustion Copyright International exhaustion Patents National exhaustion © Daniel Kraus 2002

9. The WTO house, TRIPS and GATT Ministerial Conference GATT Council (goods)) General Council TRIPS- Council GATS Council (services) Dispute settlement Body Trade Policy Review Committees Pluri- lateral agree- ments Other commit- tees (e.g. environmt

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

11. 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?

12. 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)

13. 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.

14. 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

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

16. Thanks for your attention!

17. Questions?