Patents parallel trade

The long-term consequences are still unclear. On the one hand, if the decision allows Africa s and Asia s many AIDS sufferers to receive treatment, it cannot be a bad thing. On the other hand, particularly if parallel trade develops and the patent system is undermined, there is a much reduced incentive for companies to invest in treatments for tropical diseases. 

The above factors mean that the market for pharmaceuticals is subject to severe distortions. Certain aspects will be discussed in this section, notably the pattern and cost of irmovation, the role of patents, orphan drags, the rise of generic drags, parallel trade and the attempts by governments at cost containment. 

Over the last two decades, patents have played an increasingly important role in international trade and the protection they afford has been extended. Yet parallel to this, economic research on the impact of patents has been emphasizing that this is only one of the mechanisms for encouraging innovation. Furthermore, the extension of patent protection in publicly funded research is bearing fruit. 

The case of parallel imports presents a serious challenge for many governments, in that patent protection is unequal between countries, a fact that gives rise to trade between countries that fails to respect the necessary protection to... 

It should be borne in mind that European law applies a doctrine of exhaustion of rights in relation to the use of intellectual property rights. In effect, once the right has been used by its owner, for example to put a patented product on the market in a Member State, the owner may not assert that right to prevent the product moving round the Community thereafter. This principle limits the circumstances in which these rights trade in the EU for example in relation to parallel imports. 

A Federal court (3) has summarized the parallel protection afforded by trade secrets and patents as follows ... 

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