New leak of TPP consolidated text on intellectual property provides details of pandering to drug companies and publishers

For more information:
James Love, Knowledge Ecology International
email: james.love@keionline.org, +1.202.361.3040

The May 16, 2014 version of the consolidated negotiating text for the Intellectual Property Chapter for the Trans-Pacific Partnership (TPP) agreement is a long, complex document that taken as a whole is designed to expand and extend monopolies on knowledge goods, including in particular publisher-owned copyrights, patents on inventions, and monopoly rights in data used to register new drugs, vaccines and agricultural chemical products.

See Wikileaks release here: https://www.wikileaks.org/tpp-ip2/

The document is 77 pages long. The last 11 pages include 7 annexes, addendums, non-papers and place holders. The text contains 32,018 words, including 265 footnotes, and 649 brackets, including one bracket in the title of the chapter: INTELLECTUAL PROPERTY [RIGHTS] CHAPTER.

In contrast, the WTO TRIPS Agreement is 33 pages, with 13,259 words and 14 footnotes.

This is the most significant leak of the intellectual property text since last year, when Wikileaks published the August 30, 2013 version of the text. (KEI comments on the leak of the August 30, 2013 text are here:http://keionline.org/node/1825).

Our first impression in reading the document is the extent to which the United States has sought hundreds of changes in intellectual property norms, some small and subtle, others blunt and aggressive, nearly of all of which favor big corporate right holders, and undermine the public’s freedom to use knowledge.

It will take awhile for the public to sift through the text and fully appreciate the ramifications of the proposals for new regulations on the use of knowledge goods. It is astounding that the U.S. Senate and U.S. House of Representatives support the secrecy surrounding this negotiation, which has been imposed by the Obama White House. Without the disclosure by Wikileaks, there would be no opportunity to see and debate the actual provisions in the text.

Pandering to corporate right holders, Ambassador Michael Froman, on behalf of the United States, is favoring binding obligations for 95 years of copyright protection for corporate entities, restrictions on copyright exceptions allowed by the Berne Convention, new controls and liability for use of copyrighted works in in-house intranet online services, damages for infringements based upon the “suggested retail price” of goods, expanded third parties liability for infringement, a requirement that compulsory licenses of patents be subject to a restrictive three-step test [see discussion below], 12 years of monopoly in data used to register biologic drugs and vaccines, expanded scope of patent protection for pharmaceutical drugs, vaccines and medical devices, extensions of patent terms beyond 20 years, and obligations of drug regulatory agencies to evaluate and enforce assertions that registered drugs and vaccines infringe on evergreening patents, to mention only a few issues in the 77 page document.

While pushing for radical expansions of the global standards for intellectual property rights, Ambassador Froman is also trying to narrow or eliminate the safeguards found in other intellectual property right agreements. For example, the United States is blocking text that preserves the ability of states to control anti-competitive practices - even though similar language is found in the WTO TRIPS agreement and in other bilateral trade agreements the United States has previously signed.

All of these changes become even more highly significant, because the TPP agreement will be subject to ISDS, a system that allows private investors to sue governments over the agreement -- something not allowed in the WTO agreement on intellectual property rights.

Ambassador Froman’s proposals on behalf of the United States would not only lock-in many of the worst and most controversial features of U.S. law and export them around the world, but would subject the United States taxpayers to liability from lawsuits from drug companies and publishers over several provisions in U.S. law that are plainly contrary to proposed text in the TPP. For example, the US government limits compensation for the infringement of patents, copyright and other intellectual property rights, under 28 USC 1498, for uses “by or for” the US government. These limitations on damages are important for the US Department of Defense, and the NIH’s National Library of Medicine, as well as other federal agencies. And, state governments are not subject to lawsuits for patent or copyright damages, under a series of US Supreme Court decisions that have been important not only to state agencies, but also to state universities. While the U.S. exclusion of damages for infringement by state governments are inconsistent with the WTO agreement, they have not been challenged in the WTO. But the TPP will allow Paramount, Time Warner, Pfizer, Merck and others including countless patent and copyright trolls to sue the United States over the limitations on damages from federal and state governments. (Note that drug companies can hold patents in any foreign country, to create standing to sue under ISDS) . All this is made worse by the of expansion rights required by the agreement, and the higher standards for damages.

Ambassador Froman’s proposals also undermine a key feature of the Affordable Care Act (ACA), the provision in the law that limits damages for infringement of patents not disclosed to competitors who register biosimilar products.

Always worth mentioning is the fact that USTR is continuing its efforts to prevent countries from limiting certain types of pharmaceutical drug patents that are used to extend drug monopolies (evergreening patents).

US/JP propose; CL/MY/PE/SG/VN/BN/AU/NZ/CA/MX oppose: 2bis. For greater certainty, a Party may not deny a patent solely on the basis that the product did not result in an enhanced efficacy of the known product when the applicant has set forth distinguishing features establishing that the invention is new, involves an inventive step, and is capable of industrial application.]

Developing countries are being asked to accept very restrictive standards for intellectual property in return for transition periods that defer the harm until current governments are now longer held accountable. This will be a short-term benefit in exchange for a long term harm.

Among the most significant changes from the August 30, 2013 version of the text (the last version leaked) are the modifications to the articles in the TPP that regulate exceptions to the exclusive rights in patents. In the August 2013 version of the TPP IP Chapter, there were four articles setting out the standards for exceptions to patent rights . This included (1) a general 3-step test based upon Article 30 of the TRIPS agreement, (2) a Regulatory Review Exception, sometimes referred to as the “Bolar” provision, (3) an experimental use exception, and (4) a provision on “Other Use Without Authorisation of the Right Holder,” which referenced Article 31 of the TRIPS. In the August 30, 2013 version only (1), the 3 step test, was out of brackets.

See: August 30, 2013 text: Page 30-31
Article QQ.E.5: {Exceptions}
Article QQ.E.5bis: {Regulatory Review Exception}
Article QQ.E.5ter: {Experimental Use of a Patent}
Article QQ.E.5quater: {Other Use Without Authorisation of the Right Holder}

In the May 16, 2013 version of the text, there are now just two articles on exceptions.

See: May 16, 2013 text: Page 25.
Article QQ.E.4: {Exceptions}
Article QQ.E.1362 63: {Exceptions / Regulatory Review Exception}

The most shocking change in the text is the elimination of this article from the August 30, 2013 text:

Article QQ.E.5quater: {Other Use Without Authorisation of the Right Holder}

Why was this important? Because QQ.E.5quater, on "Other Use Without Authorisation of the Right Holder" provided that "Nothing in this Chapter shall limit a Party's rights and obligations under Article 31 of the TRIPS Agreement or any amendment thereto."

Article 31 of the TRIPS is the provision under which all developing country compulsory licenses have been issued on drug patents.

By eliminating QQ.E.5quater, Ambassador Froman has created a new legal framework that will require that all compulsory licenses on patents will be subject to the restrictive language of TPP Article QQ.E.5: {Exceptions}. This QQ.E.5 language (familiar to many as taken from Article 30 of the TRIPS agreement), reads as follows:

Each Party may provide limited exceptions to the exclusive rights conferred by a patent,provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.

How does this change things? At present, a WTO member that wants to justify an exception or limitation on the exclusive rights of a patent will often justify that limitation under Article 30 OR Article 31 of the TRIPS. These are two separate paths for exceptions. How do they differ? Article 30 has the nice feature that there are no rules on procedures, and no requirement to pay money to right holders. For this reason, Article 30 is typically used to justify the exceptions that involve no money going to the right holder, such as the personal use exception, or the research or reverse engineering exceptions. But Article 30 is also restrictive, and risky, because the exception cannot "unreasonably conflict with a normal exploitation of the patent" or "unreasonably prejudice the legitimate interests of the patent owner."

For compulsory licensing, governments typically rely upon Article 31 of the TRIPS, which sets out in 642 words, a set of procedures that must be followed, limitations on the uses of compulsory licenses, and standards for remuneration of patent holders. Article 31 is seen as more complex, and less risky, because if you follow the rules in Article 31, the compulsory license cannot be challenged.

What Ambassador Froman is proposing in the TPP, and other TPP negotiators have agreed to, is to require that all compulsory licenses be subject to the so called 3-step test, which is risky and restrictive. This is a huge change in global norms on compulsory licensing of patents, and perhaps the single most consequential proposal in the TPP as regards patent rights.

USTR has defended its actions by pointing to the following Articles:

Article QQ.A.6: {Declaration on the TRIPS Agreement and Public Health}
Article QQ.A.7: {Understanding Regarding Certain Public Health Measures}

Article QQ.A.7 is a selective and abridged version of two WTO agreements on access to medicines, and includes some helpful language, such as

"the obligations of this Chapter do not and should not prevent a Party from taking measures to protect public health . . .

and

"this Chapter can and should be interpreted and implemented in a manner supportive of each Party's right to protect public health and, in particular, to promote access to medicines for all.

However, the TPP quotes do not make reference to other parts of the 2001 Doha Declaration on TRIPS and public health, such as the "clarifications" of the use patent exceptions in Paragraph 5 of the 2001 document.

More significant, from a legal point of view, is the fact that the whole TPP Chapter is full of things such as patent extensions, exclusive rights in regulatory test data, obligations to expand the patenting of minor innovations, and linkage between patents and drug registration, all of which make it nearly impossible to have access to medicine for all. Like all of these other measures, the new restrictions on compulsory licensing do not just disappear because of Articles QQ.A.6 or QQ.A.7.

Note also that Ambassador Froman continues to block agreement on other important safeguards, such as the bracketed text to protect the right to control anti-competitive practices, a topic addressed in Article 40 of the TRIPS, but opposed by Ambassador Froman in the TPP.

As noted above, some developing countries seem to be giving up a lot in terms of the substance of the agreement in return for temporary transition periods, a strategy the United States and others used to get developing countries to agree to the TRIPS Agreement. These transition periods will be apparently fixed in number of years, and not based upon actual development milestones, or evaluation of access and affordability concerns within a country.

Overall, what does this agreement say about President Obama and USTR head Ambassador Froman, as compared, for example, to President GW Bush and his two USTR heads, Robert Zoellick and Susan Schwab?

President Bush and his trade team did push restrictive language in several trade agreements, but nothing remotely as bad as the current TPP text. President Bush did agree to the 2001 Doha Declaration on TRIPS and Public Health, published the full text of the FTAA negotiating text, and in May 10, 2007, rolled back requirements for developing countries to implement patent extensions, linkage and test data monopolies -- positions that are being reversed in the TPP.

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