We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
14 April 2008
The results of innovative activity must be legally protected to encourage research and its ensuing social benefits. There are several legal protection mechanisms, the most prominent being invention patent law and scientific data law protection.
Before the approval of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), there were no international standards protecting confidential information, or specifically scientific data filed with administrative authorities to obtain marketing authorization of pharmaceuticals and agrochemicals. To create an international rule in this field, an agreement was reached on Article 39 of the TRIPs Agreement. Article 39(1) defines the extent of protection of confidential information and Article 39(3) regulates the protection of scientific data required by the administrative authorities as a condition for approving the marketing of pharmaceuticals and agrochemicals. No detailed requirements concerning data protection were included in the enacted wording, so it could be concluded that the member states are free to determine how to protect data, provided that it is protected against any unfair commercial use.
Article 39(3) of the TRIPs Agreement prescribes a set of requisites that bind the governments of member parties to protect data against any unfair commercial use.
Data required for marketing approval
What happens if a member state approves domestic marketing on the basis of previous marketing approval in a foreign country, or a group of countries, and does not require the scientific data to be filed within its own domain? From the spirit of the agreement and as a logical consequence of the obligation assumed, it follows clearly that scientific data is still protected in that state (even though the information was filed in another country), because indirect dependence on the protected data would have been necessary to obtain marketing approval. Taking into account the purpose of the ruling on data protection and the way the term ‘unfair commercial use’ has been interpreted, it must be concluded that such data should be protected even if filed in another country, because the data protection rules aim to encourage the introduction into the market of new pharmaceuticals and agrochemicals, and to offer an incentive by forbidding, during the term for which protection is granted, direct or indirect reliance on the data by a third party.
New chemical entities
The TRIPs Agreement uses the term ‘new’ as both synonymous with ‘novelty’ (this word being understood within the frame of patent law) and in the phrase ‘first-time used’ (ie, used for the first time in a product for which marketing approval is requested). The word ‘new’ can have different meanings and its final meaning will depend on the context in which it is used. This description raises the question of which of the two meanings is the one used in Article 39(3). It could be concluded that given the purpose of data protection set down in Article 39(3) of the TRIPs Agreement, ‘new’ is used to mean used for the first time. This justification is based on the aim of Article 39(3) to protect scientific data for pharmaceuticals and agrochemicals, and to encourage their marketing, whether or not they are patented, because data protection is independent from the protection and incentive provided by patent law.
It would be illogical and against the spirit of Article 39(3) to limit protection to products only recently invented that fulfil the novelty requisite as understood by patent law. On the contrary, protection extends to products containing known substances that for any reason have not been marketed and whose availability in the market, once their efficacy and safety have been proved, benefits the community. Pharmaceuticals and agrochemicals using ‘new’ chemical entities are products that include an active principle or composition that has not been previously approved for marketing by a member state's health authority.
Origination involving considerable effort
The requisite of origination involving considerable effort is to be understood as activities that require a considerable or unusual effort and are demanding in extent and duration. This requisite should be current at the moment the data is produced.
Unfair Commercial Use
The TRIPs Agreement includes no definition regarding the term ‘unfair commercial use’. Considering the criteria chosen by the dispute settlement bodies of the World Trade Organization and the aim of the data protection rules, it can be understood that commercial use is unfair if it permits a third party, which has not been authorized by the originator, to avail itself of the originator's labour investment and intellectual effort.
However, if use of the data is permitted to a party which did not originate the data, before the innovator has recovered its investment (at least), an unequal and unjust situation is created for the innovator, which had to pay to develop the innovation and is obliged to compete with parties which have made no such investment. As a general principle, any action or omission by a non-authorized third party that enables it to avail itself of work investment and intellectual efforts made by the originator in producing the scientific data must be deemed unfair.
If a member party depends directly or indirectly on the scientific data produced by the innovator and by so doing favours a competitor, it is infringing the protection envisaged in Article 39(3) of the TRIPs Agreement. There is no rule, principle or indication provided in the TRIPs Agreement, nor specifically in Article 39(3), that indicates that a competitor must acquire the data by means of dishonest practice or conduct for a commercial use to be considered unfair. It is sufficient that the competitor depends directly or indirectly on the data to obtain an unjust advantage, enabling it to avail itself of scientific data that the innovator obtained through considerable effort.
Protection of Scientific Data in Argentina
The health authorities in Argentina continue to rely unfairly on originators' data in order to approve generic versions of innovative pharmaceutical products without the originator’s authorization. The reason for this is that when Argentina enacted the Confidentiality Law (24,766) in December 1996, it was assumed that this rule was directed to adjust local legislation to the requirements of Article 39 of the TRIPs Agreement (specifically, Paragraph 3, which establishes the obligation to protect scientific data that is filed with the health authorities).
However, Act 24,766 fails to grant adequate legal protection for scientific data as required by Article 39(3) of the TRIPs Agreement.
Since data which meets the requirements of Article 39(3) must be protected against unfair commercial use, when a health authority allows the use of the originator's data by third parties without the originator’s authorization to approve generic products, the authority disregards Article 39(3) of the TRIPs Agreement. This is precisely the case with Law 24,766, since Article 5 allows for such reliance on the originator's data by unauthorized third parties.
The health authorities’ approval of products by similarity under the Confidentiality Law is inconsistent with Article 39(3) of the TRIPs Agreement, since such reliance of a member country on the data filed by an innovator in another member country commercially benefits a competitor of the originator and consequently constitutes unfair commercial use under the terms of Article 39(3). It is unfair and unjust to allow a third party which has not made the necessary investments to make savings on such important costs. Allowing such exploitation would discourage the investment necessary to introduce new products into the market, which is precisely what Article 39(3) tries to encourage.
The interpretation above is the one most in compliance with the main purpose of data protection, which is to provide legal incentives to promote the introduction of new pharmaceuticals and agrochemicals into the market. Only a correct interpretation properly protecting owners' property rights can act as an incentive for innovative research that could lead to social benefits. The existing legal protection of scientific data in Argentina is a number of steps away from a sound legal protection of IP rights.
For further information on this topic please contact Carlos Octavio Mitelman at Obligado & Cia by telephone (+54 11 4114 1100) or by fax (+54 11 4311 5675) or by email (firstname.lastname@example.org).
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.