Yesterday the Interagency Special 301 Committee chaired by the US Trade Representative held its annual public hearing. An earlier blog described the government testimony – this one describes the comments from industry groups and civil society.
Joan McGivern testified for American Society of Composers, Authors and Publishers (ASCAP), a membership organization with over 450,000 members, mostly individuals whose livelihoods depend on making money from music. She told the panel their assistance is needed by the membership to “collect their paychecks.”
ASCAP is a Performers Rights Organization, meaning it grants licenses to a wide variety of commercial music users in US and distributes royalties to musicians. They have a reciprocal relationship with other PROs all over the world. They collect royalties for American artists and send the royalties to ASCAP, and ASCAP does the same for them and their members.
ASCAP cannot collect royalties from PROs in China and in various nations in the Caribbean. Years of negotiations and efforts to resolve this through a voluntary trade association framework have failed. However, the challenges are fixable. Caribbean governments can solve the problem by enforcing laws in place applicable to cable operators and broadcasters. China can set fair rates of compensation and compensate for years of unpaid royalties. These are modest, doable steps.
AUSTR Stan McCoy asked how the problems ASACP faces in China compare to challenges elsewhere.
McGivern explained that in China, ASCAP is beholden to the Musical Society of Copyrights, which is wholly beholden to the government. The only way it will set rates is if the government allows it to. ASCAP grossly uncompensated and undercompensated in different settings there. They have asked that for movies, the film studios be responsible instead of the PRO.
McCoy asked her to elaborate on PROs in the Caribbean. She noted that HBO commented on similar issues on a greater scale. ASCAP’s submission estimated losses, but used minimal estimates because they were trying to be conservative. For instance, ASCAP’s estimates did not include estimates from other American PROs, but including them would probably double the amount of royalties lost by American composers.
There is a new PRO in Trinidad which is part of a mega PRO Columbus Communications, which has its “tentacles” in many Caribbean nations. Also, Barbados has refused to pay for public performance; courts seem ineffective. There are problems in Jamaica as well.
Sean Flynn from PIJIP testified next – he has written a blog based on his testimony here. Briefly, he noted the presence of DHHS at the hearing (DHHS has been missing from the hearing in previous years); noted that the Special 301 Report has not reflected the stated U.S. policy of seeking balance in intellectual property protection that protects the rights of owners and users of intellectual property alike; criticized attempts to impose a “one size fits all” IPR framework on countries with different realities; criticized the Special 301 reports for failing to respond to input received from civil society; and asked the Committee to include in the report an explanation of how the bilateral Special 301 process fits within the U.S.’s commitment to multilateral dispute resolution under the WTO.
McCoy asked Flynn to expand on his criticism of a German law that is found in the written comments authored by PIJIP and endorsed by eleven organizations and individuals. Flynn answered that Germany is considering a law that would give an exclusive right to owners to stop news aggregators from including quotations in search results. It is clearly aimed at Google. He noted that the CCIA’s written comments have much more detail about the proposed German law and its violation of Berne rules on quotations.
Matt Kavanagh testified for Health GAP, a network of activists and academics organized around increasing the availability of treatment for HIV/AIDS. He said that the Special 301 Report is violating the spirit and letter of Doha Declaration on TRIPS and Public Health, and trade policies that block access to medicines are a matter of life or death for people with AIDS. Low and mid income countries should not be listed in the report for TRIPS compliant measures that benefit public health.
2012 was a landmark year for the fight against HIV/AIDS. An NIH study showed that people with HIV/AIDS are 96% less likely to transmit it to others when they are on treatment, and experts have started speaking openly about the “end of AIDS.” Just a few days ago, Obama committed US to an AIDS-free Generation.” To obtain this goal we need affordable medicines. The Obama Administration risks looking disingenuous when president sets a goal to achieve an AIDS free generation, and the agencies under him act against it.
The Doha Declaration on TRIPS and Public Health reaffirms WTO Members’ right to use the flexibilities in the TRIPS Agreement. Nevertheless, when countries use these flexibilities to access affordable medicines, they end up in the Report. This needs to change. The Report should cease mentioning the policies regarding:
- Compulsory licenses. These are TRIPS compliant, and Thailand and India should not be listed for issuing them.
- Data exclusivity. TRIPS requires the prohibition of “unfair commercial use” of undisclosed data. The U.S. would like countries to implement this obligation by creating a period of data exclusivity, but countries are not required by TRIPS to do this.
- Linkage. There is no TRIPS obligation for patent linkage, and it presents a burden on under-resourced health agencies. Linkage can be a significant nonpatent barrier to access.
- Scope of patentability. This can be used to limit over-patenting, and is a right enjoyed by countries in the WTO.
- Opposition mechanisms. These are allowed by TRIPS and are often used by patient groups to oppose bad patents.
The fall in drug prices since the early 2000s has happened due to use of TRIPS flexibilities. India is a prime example of the benefits of using the flexibilities to enhance access to medicines: it supplies 80% of the world’s generics. Most African countries rely on Indian generic producers. PEPFAR and the Global Fund to Fight AIDS, Tuberculosis and Malaria rely on Indian genic producers. This helps to ensure that American taxpayers get value for their dollars. Have you done an impact on how this affects taxpayer dollars as well as people’s lives?
McCoy asked Kavanagh if his request was that the Committee remove countries that use TRIPS flexibilities from the report altogether, of it his request was that the Committee not list countries specifically for the use of TRIPS flexibilities. Kavanagh answered that his request was the latter.
Gina Vetere testified for Global Intellectual Property Center (GIPC), established by the U.S. Chamber of Commerce in 2007. She said that IP is critical for job creation and competitiveness, citing USPTO statistics demonstrating that IP is responsible for over $5 trillion of U.S. GDP and supports millions of jobs. GIPC believes Special 301 is an essential tool and a valuable resource for businesses seeking to operate globally.
This year GIPC published an international IP Index called Measuring Momentum. It looks at various aspects of IP to provide snapshots of country environments. There are eleven countries in the report. It also spotlights challenges to implementing strong IP. The report has been submitted to the record.
Vetere highlighted three “overarching challenges” to U.S. firms:
- The erosion of intellectual property rights. GIPC is concerned with anything that limits owners’ rights. They are opposed to India’s compulsory licenses and Australia’s plain packaging laws – both of which set a bad precedent
- Bilateral and regional trade agreements. GIPC believes they ought to be passed, including the TPP.
- Challenges posed by the internet. Online theft is massive and growing. The government needs tools and resources to fight online theft. GIPC hopes the Special 301 Committee will factor the notorious markets review into the Special 301.
McCoy asked Vetere to elaborate on the index. She reiterated that GIPC sent a copy in as an addendum to its written comments. The index looks at 25 factors that are indicative of the overall IP situation across countries. It cuts across different sectors that have different IPR focuses, which is a challenge (nothing is weighted). GIPC plans on expanding it, and produce it on a regular basis.
Vetere said that the U.S. needs to improve the enforcement of existing FTAs, noting that GIPC is especially concerned about the transshipment of illicit goods. She quickly cited six countries for specific IPR concerns:
- Brazil – health authorities act beyond their mandate when reviewing pharmaceutical patents; there are problematic bills related to copyright protection
- Canada – poor level of IPR protection and enforcement; courts have imposed an onerous test for utility; high levels of online theft
- China – large size and scope of all types of IP infringement; problems with data protection
- India – lack of progress in advancing IP policies; issued compulsory licenses; patent revocation for a drug patented in other countries; possible ruling on Section 3(d) of the patent law that would lessen patent protection.
- Mexico – needs stronger data protection; needs to grant border guards ex officio authority
- Ukraine – highest levels of copyright piracy in Europe; lax enforcement online.
Michael Schlessinger testified for the International Intellectual Property Alliance (IIPA), a coalition of seven associations of copyright industries. This year their written comments highlighted 48 counties and recommended Ukraine for listing as a Priority Foreign Country [the most serious designation, which triggers a process that can end with the withdrawal of GSP benefits].
Schlessinger noted that the U.S. core copyright industries contribute 6.4 % to US economy, but that they face massive costs imposed by overseas piracy. Content industries face unfair competition, and legitimate businesses built on copyright face increased threats. Studies estimate the impact at tens of billions of dollars. Rampant piracy not only impedes legit distribution, but harms business models.
Therefore, countries need to do a better job in providing adequate IP protection. This includes implementing trade agreements. The U.S. government should use all tools available to see that the trade laws are upheld.
Eric Schwartz from IIPA spoke specifically about IIPA’s recommendation that Ukraine be identified as a priority foreign country. It has been seven years since the IIPA recommended any country be designated PFC and they recognize it is a serious recommendation. But they believe the designation and the withdrawal of GSP benefits is warranted.
- Ukraine has exceedingly high piracy rates. The Petrovka market in Kiev is on the Notorious Markets list, and online piracy is rampant.
- The industry has little meaningful engagement with the government of Ukraine.
- Many Notorious websites are hosted in Ukraine, and there is little enforcement against them.
Regarding the initiative to get rid of infringing software used in government offices, there’s an estimate that it has budgeted approximately USD 12.3 million in the budget for legitimate software. This amount of funding is too low. There’s a 40% piracy rate in government ministries and we estimate the government would need USD 200 million to switch to legitimate software.
Also, camcording continues to be a problem in the Ukraine.
In all, Schwartz argued that there is not adequate and effective enforcement of intellectual property Ukraine. It is a safe haven for criminal syndicates. The IIPA thinks it is proper to designate them as PFC and to withhold benefits.
Peter Maybarduk testified for Public Citizen, a nonprofit public interest membership organization with over 300,000 members. Public Citizen is opposed to US trade policy that seeks to place obstacles in the path of countries’ rights to access medicines.
Maybarduk quoted a passage from page 19 of last year’s Special 301 Report that discussed U.S. policy and access to medicines: “the United States respects a trading partner’s right to protect public health and, in particular, to promote access to medicines for all, and supports the vital role of the patent system in promoting the development and creation of new and innovative lifesaving medicines. The assessments set forth in this Report are based on various critical factors, including, where relevant, the Doha Declaration on TRIPS and Public Health.”
Public Citizen would like the Committee to live up to this pledge, but it has failed to do so in previous years. The Doha Declaration specifically includes the right to issues compulsory licenses and the freedom to determine the grounds on which they are based, but every recent use of compulsory licenses for public health has led to a country being cited in the Special 301 Report. This is detrimental to public health policy.
This year the Special 301 Committee has an opportunity to show that its expressed guarantee is meaningful, and that a TRIPS-compliant compulsory license will not be subject to this form of light sanction. Three countries this year have issued TRIPS-compliant pharmaceutical compulsory licenses for very important for health purposes.
- Ecuador – for second generation AIDS treatment. The licenses were granted for public noncommercial use.
- Indonesia – seven licenses were issued on their individual merits for government use.
- India – compulsory licenses for cancer drugs which were offered at a price point that allowed only 2% of patients in need to obtain them.
All of these licenses are TRIPS-compliant, so there should be no Special 301 issue for any of them. Public Citizen asks that you omit mention of these from the report, or note a very specific TRIPS concern.
McCoy asked Maybarduk to identify specific language on Ecuador in previous reports. Maybarduk said that the simple mentioning of the compulsory licenses amounted to disapproval of the licenses. McCoy also asked for further information on the Indonesian compulsory licenses, saying that there is a lack of clarity about them.
Krista Cox testified for Knowledge Ecology International (KEI). She began by saying that they are happy to see that DHHS was present at the hearing this year, and noted their absence in previous years.
On health, KEI opposes any requirements or pressure for LDCs to implement the TRIPS Agreement before they are required to do so, and KEI hopes the US supports the request of LDCs for an extension of the deadline. She noted that in the past the U.S. has voiced support for an LDC extension.
Like Public Citizen, KEI wants USTR to give meaning to what they say in their reports, and urges USTR to recognize the flexibilities preserved in TRIPS. KEI objects to the practice of placing countries on in the report because they issue compulsory licenses or threaten to do so.
Last year’s Special 301 Report signaled out India for issuing a license on Nexaver. The drug had been selling for USD 68,000USD per patient per year, placing it far out of reach for people who needed it. (In the US, we routinely issue judicial compulsory licenses, so we should not pressure other countries not to issue them.)
Patent linkage is inappropriate for many countries. It is often abused, even in rich countries. The May 10 agreement made patent linkage optional, which is what we think is better for trade policy, including as an obligation in the Trans Pacific Partnership.
McCoy asked Cox to specify the language on Indian compulsory licenses in last year’s Special 301 report that KEI opposed. He quoted page 35, which says that the U.S. “will closely monitor” India’s compulsory licenses “… bearing in mind the Doha Declaration on Public Health.” If this is the language KEI objects to, what is the specific concern?
Cox answered that the fact the licenses are mentioned, and the fact that the U.S. government is going to “monitor” them – notwithstanding the reference to the Doha Declaration – suggests that the licenses are somehow inappropriate. Furthermore, KEI understands that the U.S. government has voiced concern about compulsory licenses for non-HIV medicines in other settings. There are unfortunate misunderstandings about whether compulsory licenses are allowed for medicines other than antiretrovirals.
KEI also objects to unilateral measures to push for data exclusivity, which is not required by TRIPS. There are better models for the protection of test data, such as the data sharing model used in the U.S. for agricultural chemicals.
Turning to a copyright matter, technological protection measures (TPMs) are not required by TRIPS, but the Committee cites countries for having no or insufficient TPMS in place. The standards that the U.S. pushes for go beyond international norms like those found in the WIPO internet treaties.
Joe Damond testified for the Biotechnology industry Organization (BIO), which represents 1,100 companies, many of which are small businesses with their first products in development. Damond said his industry directly employs 1.2 million people and supports 5.7 million jobs in affiliated industries. He stressed that his industry has uniquely high levels of risk.
Damond said that the weak global IP system needs everyone’s attention, including governments, industry, poor people who need a sustainable food supply, and people in around the world suffering from diseases for which there is no existing treatment. Problems faced by biotech firms include: weak data protection, compulsory licensing, and countries with multiple patent opposition procedures. Countries that are especially problematic include China, Russia, and Turkey.
Often country governments have economic development plans in place that are undermined by weak IPR protection.
BIO understands that public health requires access to medicines, and we applaud groups that purchase medicines to deliver to the world’s poor. But access to medicine advocates’ focus on patents is misplaced. Most drugs on the World Health Organization’s Essential Drugs List are not patented. None of the drugs on India’s Essential Drugs List are patented – but only 20% of the Indian population has access to them.
BIO applauds the recent WHO/WTO/WIPO report on IP and health. We note that the report examines many non-IP barriers to treatment. For instance, a lot of these countries have high taxes internally and high tariffs at the border. However, had the report’s authors been better about consulting the U.S., they could have corrected incorrect claims, like the report’s assertion that the US regularly issues compulsory licenses. (The ultimate consequence of what has been advocated on compulsory licenses earlier in the hearing is that there would be no limits for compulsory licenses at all.)
Damond said that the ultimate sanction that a country could face through the Special 301 process is presumably loss of trade benefits through the General System of Benefits (GSP). These benefits exceed those required by the WTO, so nothing in the WTO prevents the U.S. from withholding GSP benefits.
His final point was that the countries we are talking about do have the resources to protect IP and still provide medicines if it is their priority to do so. Most countries on the list spend more on defense than on health.
After all witnesses had testified, Stan McCoy reminded everyone that post-hearing comments can be submitted until 5pm on February 27 through the portal at regulations.gov.
