445. It is with interest that we have studied the communication from China, South Africa, and co-sponsors. This topic at the intersection of competition law and IP is a challenging one, it is only to some limited extent relevant in the TRIPS context.
446. However, we think it is important to include an economic point of view in this discussion. Both competition law and IP law start from the premise that government intervention can be justified to redress the effects of a market failure. The promotion of public health and the development of new and better treatment for unmet medical needs in particular is a textbook example of where you need to redress the market failure. Without the patent law and test data protection, you would have a lack of incentive for investing the massive funds required for R&D.
447. Depending on the characteristics of the market failure, there are different means to fix the problem. We can distinguish between three kinds of market failure:
a. Firstly, relating to goods with public good characteristics; examples of such goods are "inventions" or "creative works": this market failure can be fixed with IP such as patents or copyright.
b. Secondly, a market failure relating to information asymmetries between buyer and seller, e.g. concerning the quality of a good: this market failure can be fixed by introducing another IP right, namely trademarks or geographical indications.
c. And last, but not least, in the case of abuse of market power, for example if you have the power to control market entry: in this situation, antitrust law can be used as a fix.
448. The challenge we face with respect to IP rights such as patents or copyright is that they explicitly provide for a temporary monopoly/exclusive right. As for patents, the idea is to incentivize investments in R&D. Granting such monopoly/exclusive right is considered to be a precondition for innovation and future wealth. The patent right as well as all other IP rights are a deliberate restriction on free competition, which provides a necessary incentive.
449. Just like any other legal right or title granted by a legal system, patent rights can be abused and there are several means in place to prevent this. Competition law is one legal means to prevent such abuse. The intellectual property system itself provides a number of its own measures to safeguard against abuse, which are also reflected in the TRIPS Agreement.
450. Submission IP/C/W/643 mentions some aspects of the wider framework to be considered. Switzerland only partially agrees with the reference points set out in the co-sponsors' paper. We would like to recall that the UN High-Level Panel on Access to Medicines was a process that was not driven by the member states. The Members of the High-Level Panel did not reach consensus and the Member States did not endorse the recommendations.
451. Switzerland believes that building on voluntary and inclusive efforts (such as the Medicines Patent Pool), instead of denouncing the intellectual property system, is the way forward. This approach also corresponds with the collaborative spirit of the 2030 Agenda for Sustainable Development.
452. But how do the two legal institutes, antitrust and IP law, relate to each other? In Switzerland, the Antitrust Act, or so-called "Cartel Act", states that it does not apply to effects on competition that result exclusively from the legislation governing intellectual property. Conversely, we can say that the Antitrust Act may apply in cases where the effects on competition also arise from the Patents Act. IP and competition law are considered not to be contradictory, but complementary.
453. Having said that, any strong measures taken under the antitrust act or the intellectual property legislation, such as compulsory licences, should be considered solely as a policy tool of last resort. They are measures that may not necessarily reinstate competition, but may rather have a far-reaching, negative impact on the investment climate, particularly on investments in R&D of innovative medical products in a market. They should thus be applied with utmost restraint.
