North Carolina Journal of International Law

"Connecting North Carolina to the World of International Law"

Report: The Trans-Pacific Partnership and Intellectual Property: Lessons for the Next Free Trade Deal

By: Ethan Blumenthal

The ongoing story of the Trans Pacific Partnership (TPP) appears to have come to an end, at least for the United States;[1] but that does not mean that the terms found within it are not relevant. The global political realm is an ever-changing one that never fails to repeat itself. Though this past election, and the next President, show a clear aversion to free trade deals both past and future—that will not always be the case.[2] While the virtues, harms, and side-effects of a more globalized economy can all be argued in circles, it is enough to note that the policy pendulum swings in both directions. Because of that, understanding the terms agreed upon by twelve Pacific-Rim countries is essential in anticipating the terms of the next negotiated free trade deal—whatever and whenever that may be.

One of the most heralded portions of the TPP is the Intellectual Property chapter. Intellectual Property Rights (IPR) are essential to the US economy.[3] IPR intensive industries (81 out of 313 total identified by the U.S.     Patent and Trademark Office) accounted for 27.9 million jobs and $6.6 trillion (38.2%) of U.S. Gross Domestic Product (GDP). IPRs, as with essentially all property rights, are protected by laws of each State.[4] There are a number of prominent international agreements, beyond individual free trade agreements, that provide cross-border protections such as the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the World Intellectual Property Organization (WIPO) Copyright Treaty, and the Patent Cooperation Treaty.[5] The most recent free trade agreements, including the North Atlantic Free Trade Agreement, whether they be bilateral or multilateral like the TPP, now include a collection of IPR provisions colloquially referred to as TRIPS Plus.[6] These provisions are meant to build upon previous provisions by increasing both the length of IPR protection as well as enhancing enforcement remedies.[7] The TPP includes many of these provisions and expands upon them in certain areas.[8]

The IPR chapter has not come without its own individual criticisms however.[9] The most prominent of these critiques include issues with transparency in the negotiation process, benefits accruing to multinational corporations at the expense of citizens, and unintentional consequences from the expansion of enforcement mechanisms.[10] Many of these, while somewhat concerning, can be relatively easy to address. The lack of transparency can be chalked up to political necessity—rarely are large international agreements negotiated in a publicly inclusive manner. As to whom the benefits of these protections will accrue, it will be the possessor of the IPR, which is often large corporations as they have greater research capacity. From the U.S. perspective, the TPP only approaches current U.S. laws without going further—therefore the TPP enhances the rights of IPR holders while doing little to nothing to effect individual U.S. citizens.[11] The enforcement provisions and issues therein will be discussed in greater detail below.

This report seeks to examine the IPR chapter of the TPP as a whole, while taking a hard look at certain specific provisions and/or themes. While many of these provisions are interrelated, it is useful to scrutinize each provision individually and then note its effect on the IPR chapter as a whole. The areas this report will focus on include: Trademarks, Patents, Copyrights, biologic medicine protections (pharmaceutical products developed from living organisms), undisclosed test protections, and enforcement mechanisms. Whether or not the TPP is politically dead in the U.S., international IPR protections continue to be of the upmost importance to the U.S. economy and will therefore be relevant for years to come—no matter who is the President.

Trademark Protections

The trademark provisions within the TPP come close to mirroring existing U.S. law.[12] One such similarity is mandatory protection for a period of no less than ten years.[13] Other provisions delineate procedures for trademark assessment and categorization, including, a system for trademark examination and registration, an electronic registry, and a classification system built upon the systems used in existing international classifications.[14] While these laws mirror current U.S. law and many recent free trade deals, it is important to note that the TPP would increase the scope of trademark protection as it currently exists in many TPP countries.[15] Specifically, many countries currently do not provide protections for certain types of “nontraditional” marks such as sound marks, scent marks, collective trademarks, certification marks, and geographical indications.[16] Some examples of these would be “Florida” for oranges, certified organic marks, or other similar markings. Without going too deep into this category of trademarks, it is sufficient to note that the U.S. provides protections for nontraditional marks, as does the TPP, while many signatory countries do not.[17]

There are also many new provisions meant to enhance trademark law cohesion across borders. One such provision requires that each Party “provide[s] for appropriate measures to refuse the application or cancel the registration and prohibit the use of a trademark that is identical or similar to a well-known trademark….”[18] This allows countries the legal leeway to deny domestic trademarks conflicting with recognition of internationally traded goods. This provision falls within the “Well-Known Marks” section of the TPP, which broadly expands protections as they currently exist in international law.[19]

Another novel provision within the trademark section applies to the use of domain names. As this is an evolving field even within the U.S., its inclusion within the TPP should be considered significant.[20] One key component of these protections is simply providing public access to online domain name registration databases.[21] While this may seem simple, when paired with enhanced enforcement mechanisms and a wider scope of international trademark applicability, it becomes essential for equal access and fair use/warning of the internet.

There is some controversy over these provisions as well. One source is the diminishment of the fair use exception.[22] One provision – although the terms are rather ambiguous – allows a Party to provide limited fair use exceptions, yet it requires no Party to do so and can be read to weaken existing U.S. law in this field; though as a Party, the U.S. could explicitly provide for the continuing use of the fair use exception as it currently is used.[23] Another source of controversy is the expansion of protections for well-known marks. Under the TPP, a well-known mark not currently in use within a signatory country may still be provided protections.[24] For example, Japan may not have any KFC restaurants within its borders, but the brand name is sufficiently large such that it is recognized by its citizens. This would give rise to protections even though KFC does not operate there. This would benefit large brand names almost exclusively and thus has caused some negative responses.[25] However, the reaction to these expanded protections has been positive overall, and for trademarks at least, the TPP closely resembles U.S. law.

Patents

Patent protections within the TPP are almost entirely consistent with existing international provisions with a few minor changes. Existing requirements that “inventions… are ‘new,’ involve ‘an inventive step,’ and are ‘capable of industrial application’” reaffirm existing domestic and international laws.[26] The most notable patent provision requires compensation when filing and approval of patents have an “unreasonable delay.”[27] “‘Unreasonable delay’ is defined to ‘at least’ include more than five years from patent application filing in the territory of the Party or three years from a request for examination of the application, whichever is later.”[28] This is consistent with the most recent bilateral free trade agreements the U.S. has entered into.[29]

Copyrights

Copyright protection within the TPP is similar to protection provided for trademarks in that it seeks to mirror existing U.S. law.[30] The most visible alteration from existing international law is the expansion of the term of protection to seventy years after the term of life of the author—which mirrors existing U.S. law.[31] The purpose of this is to create a level playing field across state boundaries, which is a desirable goal as it makes little sense for protections to be ongoing in one country while being part of the public domain in another.[32] Like with trademarks, there is a fair use exception provided.[33] Also like with trademarks, this provision is up to the discretion of each state, providing that the state “shall endeavor to achieve an appropriate balance in its copyright and related rights system.”[34] There are also explicit enforcement provisions such that willful violation of either trademark or copyright laws shall be criminally enforceable.[35] However, there are limitations as to liability for internet service providers and non-infringing uses.[36]

The largest source of controversy for this section are existing critiques of the U.S. system of protections.[37] This is because the TPP uses U.S. law, specifically the Digital Millennium Copyright Act, as a basis for its copyright provisions.[38] The most prominent critique of this system is the extension of protections for seventy years after death—many argue that this is too long.[39]

Biologic Medicines and Undisclosed Tests

Biologic medicine is defined as “pharmaceutical products developed from living organisms.”[40] The TPP is the first free trade agreement to provide explicit protections for this type of medicine.[41] As development of these types of pharmaceuticals is increasing, explicit inclusion of these medicines should help these companies better capitalize on their innovations in the international market, perhaps reducing dependency on domestic ones.

The protections for biologics works in conjunction with protections for undisclosed tests.[42] Tests that have been submitted for marketing approval within one state shall not be required to be disclosed within five years of the submission.[43] This is to make sure that certain confidential trade materials stay confidential long enough for the submitter to achieve a return on investment.

Enforcement

Broadly speaking, the “TPP requires member countries to provide a range of IP[R] enforcement mechanisms, including civil and administrative procedures and remedies, provisional measures, border measures, and criminal procedures and penalties.”[44] There are a number of provisions within these mechanisms that stand out.

The TPP has the strongest trade secret protections of any free trade agreement currently in operation.[45] It is the only agreement providing for criminal enforcement of trade secret theft including cyber-theft.[46] This includes other protections within the “digital environment.”[47] Another stand-out provision is the provision that allows for the seizure of all assets gained from infringing IPR protections.[48] Interception of encrypted program-carrying signals, both cable and satellite, are also criminally enforceable.[49] Criminal enforcement is also available for all infringements done “willfully and for purposes of commercial advantage or financial gain.”[50]

All of these protections combine into the most robust enforcement mechanism for IPRs in any free trade agreement to date.[51]

Conclusion

While the TPP does not appear to have a way forward in the U.S. for the time being, that does not mean that an examination of its text is not relevant for future free trade negotiations. Of all the sections within the TPP, the IPR chapter is one of the most expansive and innovative. As IPRs continue to be a key source of U.S. GDP and innovation, their continued protection within the international economy is essential to U.S. interests. The TPP goes further than any other free trade agreement in IPR protection and will thus continue to be relevant in the future—regardless of present trends.


[1] Mike DeBonis, Ed O’Keefe, and Ana Swanson, The Trans-Pacific Partnership is dead, Schumer Tells Labor Leaders, The Washington Post (Nov. 10, 2016), https://www.washingtonpost.com/news/powerpost/wp/2016/11/10/the-trans-pacific-partnership-is-dead-schumer-tells-labor-leaders/ [https://perma.cc/2FZA-AAP5].

[2] See Trade, at What Price, The Economist (Apr. 2, 2016), available at http://www.economist.com/news/united-states/21695855-americas-economy-benefits-hugely-trade-its-costs-have-been-amplified-policy [https://perma.cc/2H7P-4U53] (detailing the recent political trend away from globalized trade).

[3] See Intellectual Property and the U.S. Economy, U.S. Pat. & Trademark Off., https://www.uspto.gov/learning-and-resources/ip-motion/intellectual-property-and-us-economy [https://perma.cc/5E8P-23EC] (last visited Nov. 26, 2016) (providing statistics for the impact of intellectual property economic sectors on the U.S. economy).

[4] Id.

[5] Intellectual Property Rights, Off. of the U.S. Trade Representative, https://ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/tpp-chapter-chapter-negotiating-9 [https://perma.cc/D5LD-7MYB] (last visited Nov. 26, 2016) [hereinafter USTR].

[6] Carlos A. Primo Braga, TPP: The New Gold Standard for Intellectual Property Protection in Trade Agreements?, The Huffington Post (Mar. 24, 2016), http://www.huffingtonpost.com/eastwest-center/tpp-the-new-gold-standard_b_9544428.html [https://perma.cc/WDS4-8ZX3].

[7] Id.

[8] Id.

[9] See Trans-Pacific Partnership Agreement, Electronic Frontier Found., https://www.eff.org/issues/tpp [https://perma.cc/U6N8-DJ7X] (last visited Nov. 27, 2016) (criticizing certain aspects and predicted impacts of the intellectual property provisions within the TPP).

[10] Id.

[11] See USTR, supra note 5.

[12] TPP IP: Copyrights and Trademarks in the Trans-Pacific Partnership, David Lizerbram & Assoc. (Aug. 22, 2016), http://lizerbramlaw.com/2016/08/22/tpp-ip-copyrights-and-trademarks-in-the-trans-pacific-partnership/ [https://perma.cc/XF3M-G4VZ] [hereinafter Lizerbram].

[13] Id.; Trans-Pacific Partnership ch. 18, art.18.26, Nov. 5, 2015 (pending authorization) (available at: https://ustr.gov/sites/default/files/TPP-Final-Text-Intellectual-Property.pdf [https://perma.cc/VET5-728J]) [hereinafter Chapter 18].

[14] Chapter 18, supra note 13, at arts.18.23-18.25.

[15] Id. at art. 18.22; Lizerbram, supra note 12, at para. 4.

[16] Lizerbram, supra note 12, at para. 4.

[17] Id.

[18] Chapter 18, supra note 13, at art. 18.22.

[19] See Gina M. Vetere, Marty Hansen, Marney Cheek and Jay Smith, What’s New in the TPP’s Intellectual Property Chapter, Covington and Burling, LLP (Nov. 24, 2015), https://www.globalpolicywatch.com/2015/11/whats-new-in-the-tpps-intellectual-property-chapter/ [https://perma.cc/JT4T-VLRX] [hereinafter Covington].

[20] Id.

[21] Id.

[22] Lizerbram, supra note 12 at para. 5.

[23] Id.; Chapter 18, supra note 13, at art. 18.21.

[24] Lizerbram, supra note 12 at para. 5-6.

[25] Id.

[26] Covington, supra note 19, at paras. 6-7.

[27] Id.

[28] Id.

[29] Id.

[30] Lizerbram, supra note 12, at para. 8.

[31] Id.

[32] Id. at para. 9.

[33] Id. at para. 10.

[34] Id.; Chapter 18, supra note 13, at art. 18.66.

[35] Lizerbram, supra note 12, at para. 12.

[36] Covington, supra note 19, at para. 13.

[37] Lizerbram, supra note 12, at para.11.

[38] Id.

[39] Id.

[40] Primo Braga, supra note 6, at para. 7.

[41] Id. at para. 9.

[42] Covington, supra note 19, at paras. 8-10.

[43] Id.

[44] Id. at para. 15.

[45] Id. at para. 14.

[46] Id.

[47] Id. at para 19.

[48] Chapter 18, supra note 13, at art. 18.75.

[49] Id. at art. 18.79.

[50] Id. at art. 18.69.

[51] Covington, supra note 19, at paras. 15-21.

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