Hot Topics in the Intellectual Property Chapter of the Trans-Pacific Partnership Agreement (TPP): How Will Things Shake Out?

More than two-and-a-half years ago, the United States tabled their text for the intellectual property chapter at the Fifth Round of negotiations which took place in February 2011 in Santiago, Chile. In March 2011, that text was leaked and contained many aggressive proposals as well as some placeholder text for pharmaceuticals in other areas. The United State tabled its pharmaceutical text in the Eighth Round of Negotiations in Chicago, IL in September 2011 and text on copyright limitations and exceptions in the July 2012 round in San Diego, CA; both of these texts were subsequently leaked.

Because of leaks, we are aware of what the United States has proposed but leaks of other country proposals have not been readily available. We have some information that has been publicly shared or reported in the media about the other country positions, for example the universal opposition to the U.S. "TEAM" proposal on pharmaceuticals. Some information we have received about country positions through various sources is confidential and cannot be shared. What we're left to rely on is the highly aggressive standards proposed by the United States that would increase substantive rights for right holders of both copyright and patents, while also ratcheting up obligations on enforcement of intellectual property rights. Some of these provisions have never before been seen in other U.S. free trade agreements, even those amongst developed countries. Some are not even consistent with current U.S. law and, as a result, are not only TRIPS-plus but U.S.-law-plus as well. It is appalling that the U.S. would seek to impose such high standards in the TPP considering the wide range of development between TPP parties from countries like Malaysia, Peru and Vietnam on the lower end of the spectrum to countries like the United States, Canada and Australia on the higher end.

Based on the U.S. leaked text and our understanding of where things currently stand in the negotiations, the following issues appear to be still highly controversial. Could these issues become political issues and left for trade ministers to decide and, if so, will other countries accede to the U.S. demands in exchange for concessions in other chapters? Here are ten of some of the more controversial issues, though the list below is by no means exhaustive.

  • Exclusive rights over test data: The U.S. has proposed exclusive rights over test data and many countries currently have data exclusivity in their laws. However, TRIPS only requires data protection of undisclosed information. Although potentially controversial, data exclusivity has been included in numerous past free trade agreements, including those concluded by the United States.
  • Patent linkage: The U.S. has proposed mandatory patent linkage, that is, linking the drug regulatory approval to the patent status. Patent linkage is highly controversial and not permitted in most European countries. It was made optional by the May 10, 2007 Agreement, known also as the "New Trade Policy" but some countries in the negotiation reportedly support some form of patent linkage while others are very much opposed.
  • Patent term extensions: The U.S. has proposed patent term extensions to compensate for both regulatory delays and patent office delays. One argument that the U.S. has been making to persuade countries to accept patent term extensions (if they do not already have it in their current laws) is by making the argument that because that particular country does not have delays in their marketing process or patent office, patent term extensions will not affect them and therefore provide no harm.
  • Evergreening patents: The U.S. proposed patents on new forms, new uses and new methods of using an existing product, even absent any enhanced efficacy. This practice, known as "evergreening" is commonly used by pharmaceutical companies to extend the life of the patent. Reportedly, some countries have supported this provision to varying degrees.
  • Patentable subject matter: The U.S. has completely reversed Article 27.3 of TRIPS which explicitly allows parties to exclude certain categories from patentability. Instead, the U.S. has proposed a requirement that parties to the TPP provide for patents on plants and animals; as well as on diagnostic, therapeutic and surgical methods, despite the exclusion in the United States that exempts medical practitioners and surgeons from liability for use of a surgical method.
  • Copyright terms: The U.S. has proposed very long copyright terms that go well beyond the requirements of international law. It proposes a period of life plus an addition seventy years after the death of the author, 95 years for corporate works or 120 years for unpublished corporate works. Longer copyright terms have come under heavy criticism as they often result in a deadweight loss and, for net-importing countries of intellectual property, the royalty results in a net flow and hence pure transfer overseas. However, some countries already have the extended patent terms of life plus seventy years in their domestic copyright laws as a result of previously negotiated FTAs with the U.S. Even within the United States, this term has been controversial and Maria Pallante, Register of Copyrights, suggested introducing formalities for terms beyond what is required by international law and the infamous Republican Study Report suggested a copyright term structure that actually went below international standards.
  • Technological Protection Measures (TPMs): The U.S. proposal on TPMs is based off of the Digital Millennium Copyright Act (DMCA), the law passed in the U.S. after ratifying the WIPO Internet Treaties. The proponents of the DMCA admitted that the DMCA went well beyond the requirements of the WIPO Internet Treaties and abuses of TPMs have been well documented by the Electronic Frontier Foundation. Despite the known shortcomings of the DMCA, the U.S. has still proposed tight restrictions on TPMs or "digital locks," made circumvention an independent and separate cause of action apart from any underlying copyright infringement, and have included only a very narrow and closed list set of limitations and exceptions only allowing for additional limitations ad exceptions through and administrative or legislative three-year rulemaking procedure. This process has come under fire recently in the U.S. after the Register of Copyrights refused to grant the requested exemption to jailbreak a cell phone, resulting in a bipartisan bill known as the Unlocking Technology Act of 2013.
  • Internet Service Provider (ISP) liability: Like its proposal on TPMs, the U.S. proposal on ISP liability is largely based off of the DMCA. It is a long and detailed proposal, essentially imposing a one-size-fits-all model on TPP countries. This model provides for safe harbor for ISPs, provided that they comply with a list of requirements. A notice-and-takedown system would be implemented and a graduated response system would be required. In the United States, this system has been widely abused and takedown notices have been requested to target business competitors, restrict free speech, or interfere with political ads during election seasons. This system is notably very different from the recently enacted Canadian system which uses notice-and-notice instead, and uses a completely different theory as to whether an ISP is presumed liable to begin with.
  • Criminal enforcement: The U.S. proposal on criminal enforcement is nearly three pages long, containing multiple paragraphs and subparts, much more detailed than the TRIPS requirements contained in a single paragraph under Article 61. The U.S. proposal strips countries of their TRIPS flexibilities to define commercial scale infringement, would apply even in the cases of private financial gain or where there is no direct or indirect motivation of financial gain, and require parties to provide for both terms of imprisonment as well as monetary fines. This proposal greatly increases the scope of behavior that can be criminalized and also strips away the power of countries to decide for themselves whether they want to include imprisonment sentences for intellectual property infringement.
  • Border measures: While the TRIPS agreement applies border measures to goods that are imported into a country, in order to stop infringing goods from entering the channels of commerce of that country, the U.S. proposal in the TPP would seek to expand such application to both in-transit goods as well as goods that are exported. While such application not only places a greater burden on customs and border officials who often have limited resources, it is also notable that there have been several seizures of legitimate goods, most infamously in the cases of legitimate generic medicines, where the product was legitimate and lawful in both the country of import and export, but was nonetheless seized in the country of transshipment. Will countries agree to the U.S. demands of applying border measures to exports? To in-transit goods?

The result of these proposals is that, if accepted, the balance of the intellectual property system will be tilted too greatly in favor of the rightholder, without appropriate safeguards and balance for consumers and patients.

There are other aggressive measures proposed by the United States and the list above is not meant to be exhaustive, but merely highlights some of the more contentious issues that could potentially reach a political level, or at the very least, reach a Chief Negotiator level. Other issues include, for example, the proposed ban on parallel importation for copyrighted works, the use of suggested retail price as a potential measure for damages, limitations and exceptions to copyright, prohibition on pre-grant opposition and the list of treaties each party will have to ratify or accede to.

Now that there are (reportedly) no full negotiating rounds left and outstanding chapters have moved into so-called intersessional rounds, what can be done moving forward to improve the outcome of the TPP? Stakeholders in each TPP negotiating country -- Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam -- should find out where their countries stand on the controversial issues. Countries who take positions that would limit and harm access to medicines and access to knowledge should be made well known and publicized. They should be lobbied to promote better balance that protects consumers, not just the interests of right holders.