Sep 212012

Today USTR hosted an interagency hearing on the entrance of Mexico into the TPP negotiations. Other agencies on the panel were Agriculture, EPA, State, Commerce, Labor, and Treasury. In her opening statement, Barbara Weisel noted that Mexico is the second biggest destination for US exports. She also said that “all nine countries are committed to expanding” the agreement to other countries in the region.

Ten witnesses testified, including 3 focused on IPR – James Love from Knowledge Ecology International (KEI); Eric Schwartz from the International Intellectual Property Alliance (IIPA); and Jay Taylor from the Pharmaceutical Research and Manufacturers Association (PhRMA).

James Love began his testimony on the issues of transparency.  The addition of Mexico and Canada to the TPP negotiations creates a huge trading block, so its rules on IPR (and many other topics) will become new global norms. It is therefore deeply offensive that these legally binding durable norms are being fashioned in secret.  This type of secrecy was tried in the ACTA negotiations, and it contributed to ACTA’s defeat in the EU Parliament and its loss of legitimacy in other forums.

The administration’s contempt for the public becomes clearer when you consider how extensively it briefs corporate interests. The Chair of the advisory board for IP is chaired by a PhRMA official while the public has no access to text. Sen. Wyden and many other Members of Congress have requested access to the text, and the public doesn’t understand why they’re shut out. Why are the proposed IP provisions shown to drug companies but not to Doctors Without Borders?

There are millions of Spanish-speaking people in the U.S. and Mexico with disabilities who could benefit from blind-accessible formats of copyrighted works. Mexico and the U.S. are both active in the WIPO negotiations to expand access to copyrighted materials for people with disabilities.  We’d like the U.S. to create a provision that allows countries to exchange works in these formats.

Both the U.S. and Mexico are concerned about Chagas disease. According to CDC it is endemic in Mexico Central America, and South America (and it effects 300,000 people in the U.S.). R&D almost is almost nonexistent for Chagas disease because it largely affects the poor and uninsured. The TPP should include commitments by countries to support R&D on Chagas disease.  Justification: a lot of the provisions in the TPP aim to raise the price of drugs (new patent rules, data exclusivity, undermining price negotiations) in order to fund R&D.  It is problematic that trade policy focuses on having consumers pay high prices on drugs. When you talk about protecting consumers, issue of funding R&D comes up.  So this could be a priority area where you begin to build the idea that you are solving global problems with something more patient-focused.

On the issue of copyright exceptions, the US should look at the Berne Convention, specifically the part that deals with exceptions to rights. The Berne Convention contains many exceptions to copyright law for things like quotation that do not fall under the three step test.  They closely correspond to uses covered by fair use in the U.S.

But the American system of fair use is unusual, and it could be challenged in a dispute settlement in WTO or TPP.  Industries that depend on fair use to function and innovate are massive platforms of innovation in the U.S., and are totally reliant on limitations and exceptions to copyright.  Yet the U.S. proposal on limitations and exceptions is more restrictive than current rules in TRIPS or other FTAs, including the Korea FTA.  Our approach should be the opposite.  Remember that the real problem is piracy, not fair use.  Don’t mix the two up – then you turn things into infringement that are not considered infringement today.

A panelist from the Department of Commerce asked Love to specifically address Mexico in the TPP. He answered that Mexico has a GDP per capita that is about one fifth of the U.S. GDP per capita, so it should not be required to have the same level of IPR on medicines as high income countries. He also brought up Mexico’s obligations under a trade agreement with the EU to provide sui generis protection for databases – a right that is contrary to U.S. norms and to Berne. (In the U.S., freedom to create databases helped US move beyond EU after EU created the siu generis database protection.)

Eric Schwartz from IIPA noted that his group is an alliance of 7 trade associations for copyright-reliant industries, and that their studies show they represent over 6% of U.S. GDP and millions of jobs.  He argued that strong copyright laws, active enforcement, and effective collecting societies will help creators and producers in both the U.S. and Mexico.  Citing Justice Ginsburg, the purpose of IP in the Constitution is not solely to spur the creation new material but to help with the dissemination of existing material as well.

IIPA endorses Mexico’s participation in the TPP. Mexico has been a leader in the international arena for the promotion of strong IP protection. However, their own regime is not up to international norms.  Mexico is not a member of the WIPO internet treaties, which are already becoming outdated because they set the norms before P2P existed.  Strengthening domestic laws and the enforcement of these laws will improve both the U.S. and Mexican economies as a whole, and the critical sectors that depend on IPR.

Specific piracy problems faced by IIPA members in Mexico include internet piracy, CD/DVD burning, camcording, unlicensed software by businesses, commercial-scale unlicensed photocopying around universities, and the spread of hard copies of materials in street markets. The Mexican response to these problems has been one of cooperation.  Mexican government agencies work well with our companies, but they need improved training and an improved legal regime.

As copyright industries move into the cloud, this requires the transfer of data among data centers in multiple countries.  This will require country cooperation. Examples of IPR protections that are missing in Mexico related to online piracy include notice and takedown provisions, third party liability for ISP, technological protection measures.

An official from the State Department asked what our top priorities for Mexico should be in the negotiations, given that Mexico is already a NAFTA country and has signed ACTA.  Schwartz answered that the purpose of the TPP copyright provisions is to modernize copyright laws in the countries so that they meet current international norms.  The domestic laws should go beyond the standards of the 1996 WIPO internet treaties – they ought to meet 2012 standards.  The more countries harmonize copyright, the easier it is to disseminate copyrighted works across borders.  If you look at history of changes to U.S. copyright law, changes were made to make our own laws more similar to changing international norms, and this was a good thing.

The panelist for the Commerce Department noted that Mexico has both consumers and producers of IP protected goods, and asked if there is evidence that Mexican rightholders are negatively affected in third countries.  Schwartz answered that he does not know of evidence specific to the question.  But in piracy generally, successful producers become targets.  Schwartz said he’d assume that any Mexican content considered popular would be targeted by piracy.

Schwartz also noted that during trade negotiations between Mexico and the U.S. in the 1990s, the Mexicans became upset that their films were being used without authorization in the U.S. Therefore, we fixed it, restoring protection to Mexican works that had been in the public domain.  This was extended to all countries through the TRIPS Agreement.

Jay Taylor from the Pharmaceutical Research and Manufacturers Association said that firms represented by his group provide 4 million jobs and millions in exports.  He noted that Mexico is the 11th largest market for drug companies.  Taylor said that TPP could be beneficial if it contains significant provisions that build on previous commitments.  Mexico should be made to comply with NAFTA and TRIPS obligations before being allowed to

PhRMA has three main concerns regarding IPR in Mexico and a non-IPR concern:

  • Though Mexico has taken steps towards data exclusivity DE, (through guidelines issued this past summer) the government still lacks explicit regulations guaranteeing a five year period of data exclusivity for all medicines, regardless of chemical makeup.
  • Mexico needs to strengthen its enforcement of enforcement, including through injunctions.
  • Mexico does not provide patent term restoration to compensate for regulatory delays.
  • Redundant pricing and reimbursement policies delay the entrance of new drugs to market.


The panelist from Commerce asked Taylor about problems with patent-regulatory linkage in Mexico. She asked if there have been problems since a 2010 Mexican Supreme Court ruling on the matter. Taylor said that PhRMA was happy about the Supreme Court ruling, but that the ruling is not being put into effect at the agency level.

Commerce asked how the measures taken by the Mexican government on data exclusivity were different than the regulations PhRMA is seeking. Taylor said that he lacked specifics, but that there it did not apply to all types (biologics and small molecule) drugs.