April 8, 1999 letter to Vice President Gore on US Policy toward South Africa

                              Ralph Nader
                              P.O. Box 19312
                              Washington, DC 20036

                              James Love
                              Consumer Project on Technology
                              P.O. Box 19367
                              Washington, DC 20036
                              202.387.8030; love@cptech.org

April 8, 1999

Vice President Albert Gore
Washington, DC                          

Dear Vice President Gore,
We are writing to express our outrage that you have used your
office to pressure the South African government to repeal its
statutory authority for providing for compulsory licensing of
patents for essential medicines.  This comes in the beginning
stages of the largest new public health crisis of our generation. 
The United States Surgeon General has likened the HIV/AIDS
epidemic in Africa to the plague which decimated Europe in the
14th century.  Public health officials estimate that one in five
pregnant women in South Africa are HIV positive, and that more
than 45 percent of the South African military personnel are
As Chairman of the United States/South Africa Binational
Commission (BNC), you have engaged in an astonishing array of
bullying tactics to prevent South Africa from implementing
policies, legal under the rules of the WTO, that are designed to
expand access to HIV/AIDS drugs.  

We are attaching several documents.  Appendix A is a report
prepared by the United States Department of State and provided to
the House Committees on Ways and Means, Appropriations and
International Relations, on February 5, 1999.  Appendix B is a
copy of Article 31 of the WTO/TRIPS agreement, which sets out the
rules under which nations can use compulsory licensing of patents
to achieve public interest objectives.  Appendix C is a four page
section from a 1999 World Health Organization (WHO) report that
explains how compulsory licensing of essential medicines is done
under the WTO/TRIPS agreement. Appendix D is a copy of the
presentation to the Executive Board of the World Health Assembly
by Peter Goosen, Charge d' Affairs at the South African Permanent
Mission in Geneva. Appendix E is a background paper on compulsory
licensing prepared by the Consumer Project on Technology (CPT)
for a March 26, 1999 meeting in Geneva on compulsory licensing. 
Appendix F is a US government position paper on compulsory
licensing that was presented by Lois Boland from the US Patent
and Trademark Office.  Appendix G is a presentation by Adrian
Otten, the Director of the Intellectual Property Division for the
World Trade Organization (WTO), for a meeting of the World Health
Assembly's ad hoc working group on the Revised Drug Strategy,
held in Geneva on October 13, 1998.

Taken together, these documents provide a chilling account of the
US government's abuse of its superpower status.

Let us start with the February 5, 1999 Department of State report
to Congress on the Clinton/Gore Administration's efforts to undo
the South African Medicines Act.  It begins with this statement:

     The intellectual property rights protection issue
     surrounding Article 15(c) of the December 1997
     amendments to the South African Medicines and Related
     Substances Act of 1965 ("Medicines Act") is a top
     priority for the United States Government's (USG's)
     economic relations with the Republic of South Africa. 
     Resolving this bilateral trade conflict has been and
     remains a vital component of our bilateral commercial
     relationship.  All relevant agencies of the U.S.
     government   the Department of State together with the
     Department of Commerce, its U.S. Patent and Trademark
     Office (USPTO), the Office of the United States Trade
     Representative (USTR), the National Security Council
     (NSC) and the Office of the Vice President (OVP)   have
     been engaged in an assiduous, concerted campaign to
     persuade the Government of South Africa (SAG) to
     withdraw or modify the provisions of Article 15(c) that
     we believe are inconsistent with South Africa's
     obligations and commitments under the WTO Agreement on
     Trade-Related Aspects of Intellectual Property Rights

This 10 page single spaced report provides chapter and verse of a
two year campaign to use the weight of US power, short of
military warfare, on South Africa to prevent that country from
implementing policies to obtain cheaper sources of essential
medicines.   What is particularly brazen is the suggestion that
the South African government is acting outside of its obligations
under the WTO/TRIPS agreement.  This is untrue and US trade
negotiators know this is untrue.  

The two disputed issues in 15(c) of the South African medicines
act are parallel imports and compulsory licensing.  These are
unambigously legal under the WTO/TRIPS.  Indeed, with respect to
parallel imports, the United Kingdom and several European Union
countries have extensive trade in parallel imports of
pharmaceutical drugs, and there have been countless cases before
the European Court of Justice that have upheld this practice.  If
the US government is so concerned about parallel imports, why
doesn't it bring a trade action against EU countries?  The reason
is simple.  Under Article 6 of the TRIPS, parallel imports are
perfectly legal.  The Department of State even acknowledges this
briefly on page three of its own report to Congress when it notes
"On the parallel imports issue, however, US government attorneys
note that under the terms of the TRIPS agreement, disputes
related to parallel importation are not subject to WTO dispute
settlement procedures."  The reasons that this is the case are
that parallel imports are legal under the TRIPS agreement and are
commonly used throughout the world.  Recent Supreme Court and
legislative actions in Japan, New Zealand, Australia and even the
United States have all supported this, as your trade officials
fully know, and which has been pointed out by CPT on several
occasions. Yet your own staff continues to pillar Minister of
Health Dr. Nkosazana Zuma and the South Africa government as if
they were outlaws on international scene. This is a form of
political slander that should deeply offend all who respect the
rule of international law.

The other primary issue concerns compulsory licensing of patents. 
As is described in the attached background paper on compulsory
licensing, the United States government uses compulsory licensing
frequently for a wide variety of purposes. South Africa has never
issued a compulsory license on a pharmaceutical product.  The
United States has done this several times in the past three
years. And the United States employs compulsory licensing in
countless other cases.  For example, in November of 1998 the US
Department of Justice obtained more than 150 compulsory licenses
to a Monsanto biotech patent.  Kenneth Starr was involved in a
compulsory licensing dispute involving Hughes Aircraft company. 
The US maintains compulsory licensing statutes for government
use, for clean air, for nuclear power and for other purposes.  A
federal district court recently ordered compulsory licenses that
involve Intel, and the US Justice Department is considering
compulsory licensing that involves Microsoft.  It is gross
hypocrisy to act as if South Africa is an outlaw in the world
community because it is considering the use of compulsory
licensing for essential medicines.  But this is far worse than
hypocrisy.  Africa is confronted with a public health crisis of
historical proportions.  Of course South Africa should use
compulsory licensing to expand access to essential medicines! 
This is an emergency, and millions of lives are at stake.  Why
should President Nelson Mandela, Deputy President Thabo Mbeki and
Dr. Nkosazana Zuma permit their population to be defenseless
simply because Glaxo Welcome and Bristol-Myers Squibb want the
power to set prices for US taxpayer funded and government
developed HIV/AIDS drugs in Africa?

Compulsory licensing is not an attack on the patent system, it is
part of the patent system.  Compulsory licensing of patents is
not an attack on the TRIPS agreement, it is part of the TRIPS
agreement. (Article 31)  

The WTO itself is quite clear that countries can use compulsory
licensing for whatever purposes they choose, so long as they
abide by Article 31 conditions, including payment to patent
owners.  These are the comments of Adrian Otten, the Director of
the Intellectual Property Division at the WTO, in an October 13,
1998 presentation to the ad hoc working group on the WHA's
Revised Drug Strategy.  Speaking of the TRIPS, Mr. Otten said:

     [T]he Agreement also allows Members to authorize use by
     third parties (compulsory licenses) or for public non-
     commercial purposes (government use) without the
     authorization of the patent owner.  Unlike what was
     sought by some countries in the negotiations, the
     grounds on which this was done are not limited by the
     Agreement, but the Agreement contains a number of
     conditions that have to be met in order to safeguard
     the legitimate interests of the patent owner. [emphasis

At the same meeting, Richard Wilder, an American working for
World Intellectual Property Organization (WIPO) who previously
worked for the pharmacuetical industry, said quite plainly, "the
right to exclude others from using a patented invention may be
subject to limitations in some countries, including by the right
of the government to use the invention or by the grant of
compulsory licensing."  [emphasis added]

There are many examples where countries set out specific criteria
for compulsory licensing.  French law authorizes compulsory
licensing when medicines are "only available to the public in
insufficient quantity or quality or at abnormally high prices." 
Many countries have similar provisions, including the United
States as part of the Bayh-Dole Act, which specifically singles
out cases where compulsory licensing is needed to "alleviate
health or safety needs which are not reasonably satisfied."  In
42 USC Sec 2183, the United States permits the compulsory
licensing of patents for nuclear energy that are "affected with
the public interest."

As the United States Federal Trade Commission has recently
pointed out, the new era of biotechnology will create a number of
areas where compulsory licensing will be essential to permit
innovation in new high technology fields of medicine.  Consider,
for example, this commentary by Michael Kern on a recent
compulsory licensing decision in Germany:

     [W]e now are confronted with the situation that
     plaintiffs and defendants may employ their respective
     patents to block each other from exploiting interferon
     as a therapeutic agent against rheumatoid arthritis. If
     the market does not rectify this `patent failure,' the
     public may have to wait twenty years before gaining
     access to this therapeutic agent. A compulsory license
     in situations involving dependent patents, as provided
     for in various countries, is a means to correct patent
     failure coupled with market failure. One should not
     forget that patents represent a interventionist
     instrument, ultimately for the sake of community
     welfare. [emphasis added]

The fact that compulsory licensing is legal under international
trade law and under the TRIPS agreement is acknowledged by US
officials in other settings, such as when they are in the
presence of informed persons.  For example, in a March 26, 1999
meeting in Geneva on compulsory licensing, US PTO official Lois
Boland acknowledged that countries have the right to use
compulsory licensing under international law and under the
WTO/TRIPS agreement.  But she added: 

     The fact that [the current US] view is not reflected in
     the TRIPs agreement, in the multilateral context, is
     fully acknowledged. In our bilateral discussions, we
     continue to regard the TRIPs agreement as an agreement
     that establishes minimum standards for protection and,
     in certain situations, we may, and often do, ask for
     commitments that go beyond those found in the TRIPs
This is the key point.  The US is seeking something more than
what is required by the TRIPS.  The US government's bullying of
South Africa has been justified to poorly informed reporters and
Members of Congress as if it was simply a matter of getting South
Africans to abide by international law.  But once one understands
that South Africa is seeking to live with the terms of the TRIPS
agreement and that it is the US government that is unhappy with
the TRIPS, one has to confront fundamental questions.  Why is the
US doing this?  Does it make any sense given the AIDS epidemic in
South Africa?

Like the Americans, the French, the Germans, the Japanese and 
virtually all OECD countries, the South African government has
the authority and the responsibility to implement intellectual
property laws that serve the interests of its own citizens. 
South Africa is acting according to international law.  It is the
United States government that refuses to follow WTO dispute
resolution mechanisms, and seek a legal judgement on the South
African compulsory licensing practices.  It is the United States
government that is taking matters into its own hands and
deploying an astonishing assault on South African sovereignty and
critical public health responsibility.  It is the United States
government that is literally asking South Africa to abandon the
lives of millions of infected citizens in order to receive
reductions in US barriers to trade or economic aid.  What kind of
Vice President are you if you cannot take time out from frantic
political fundraising and today recognize the immorality of US
policy toward the South African people on this issue?

We have written your office and other officials in the Clinton/
Gore Administration calling for consultations with public health
groups on US government policies on intellectual property rights
and the international AIDS crisis.  This has not occurred. 

Today we are asking that you reverse US policy toward South
Africa.  We ask that you instruct Secretary Madeleine Albright,
Under Secretary Stuart Eizenstat at the Department of State,
Secretary William Daley at the Department of Commerce, United
States Trade Representative Charlene Barshefsky, Stuart
Nightingale at the US Food and Drug Administration and others to
stop their opposition to South African policies on compulsory
licensing and parallel imports of pharmaceutical drugs.  We and
the HIV/AIDS and public health communities who are increasingly
concerned about this issue await your response.  


Ralph Nader                   

James Love
Consumer Project on Technology

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