sean at podiumThe Trans Pacific Partnership’s Intellectual Property chapter, as it leaked out to the public earlier this week, is 95 pages of restrictions on Congress’s authority to change U.S. intellectual property laws – none of which have been officially shared with the public or most Members of the U.S. Congress. The proposed agreement reads like a complex and highly specific domestic statute. And that itself is a problem. Good international intellectual property agreements embrace broad standards that leave large amounts of flexibility in how domestic laws meet those standards. Much of the U.S. TPP proposal is based on the specific wording of U.S. statutes — meaning that, if adopted, Congress would be violating international law if it chose to amend those statutes. In other areas it promotes policies that have never been adopted by Congress, and are frequently in conflict with current proposals to change our laws. Here is a brief list of some of the most controversial issues. 

Blocking Proposals to Amend U.S. Intellectual Property Laws. 

Technical protection measures (DMCA) and cell phone unlocking. The US position would ban Obama’s proposal to amend the Digital Millennium Copyright Act to include a permanent exception for cell phone unlocking.

Formalities and copyright term extensions. The US proposal would outlaw the U.S. Registrar of Copyright’s proposal to require registration to obtain copyright terms beyond 50 years.

Internet rebroadcasts. US proposed that member countries do not permit retransmission of television signals on the Internet, banning copyright exceptions to allow internet rebroadcast (e.g. under a statutory license like that enjoyed by cable and satellite companies),which may block Senator Rockefeller’s internet TV bill (QQ. H.12.).

Data exclusivity for biologics. There is no leaked text on the U.S. proposal for data exclusivity for biologic drugs. But USTR officials have repeatedly stated that they intent to offer a proposal for 12 years of data exclusivity — meaning that all biologic drugs get a 12 year marketing monopoly upon first registration even if they are not under patent. Other drugs get 5 in the U.S. and none in many other countries. A 12 year rule would threaten the Obama Administration’s own policy in its budget request to reduce U.S. exclusivity to 7 years.

Extending Patents and Inhibiting Access to Medicine

Revoking of May 2007 Agreement on Access to Medicines. The proposal revokes the agreement between a Democratic  Congress and the Bush Administration to give developing countries more flexibility to promote access to medicines through intellectual property laws. Specifically, it proposes that all TPP members grant patent extensions and monopolies on clinical trial data — provisions decried by access to medicine groups like Doctors without Borders/MSF.

Patents on plants, animals and surgical methods. US is still pushing for extension of patent protection to plants, animals, and medical procedures explicitly carved out of of the World Trade Organization “TRIPS” agreement covering intellectual property.

Compulsory licenses. US opposes a clarification endorsed by nearly every other TPP country that the TPP should not be interpreted to limit TRIPS article 31 compulsory licenses.

Treble damages for patent violations. The US, not joined by any other party, is proposing a rule requiring treble damages for patent violations. The US proposal does not track US law, which authorizes such damages only for willful violations. Granting treble damages for patent violations is especially problematic in developing countries where medicine suppliers have strong incentives to price so high as to serve only the richest segment of the population. Consider the case of India where Bayer recently priced its cancer drug Nexavar at about $7,000 a month in a country where the average income is about $2 a day. We need more incentives for generics to press the envelope and challenge patents in such countries; treble damages provides the opposite incentive.

Cross border seizures of medicines. The US proposal replicates come of the most controversial proposals in ACTA related to the cross-border seizures of legitimate generic medicines.

  • The US wants border controls extended to “confusingly similar” goods – a standard that was used to detain legitimate generic drugs in Germany, which became a key flashpoint in the Anti-Counterfeiting Trade Agreement (ACTA) debate, leading to that agreement’s ultimate rejection by the EU parliament and non-ratification in the U.S.
  • The US also proposes the ACTA standard that border cases be decided based on the law of the transit country through which a good is traveling through, not based on the law of the “country of importation” QQ.H.6.1. Here, the U.S. is proposing the same standard that enabled the Dutch seizures — wherein generic medicines lawfully made in India to be lawfully sold in Brazil were seized and destroyed in Netherlands in whose airports the medicines were transiting through.
  • The U.S. opposes a proposal by other parties clarifying that IP must not be used as a barrier to legitimate trade. This language, contained in TRIPS, was used by India to challenge the Dutch seizures in the TRIPS Council.

Widespread criticism of similar standards when they leaked in ACTA led the negotiators to remove patents from the border enforcement sections of the final agreement. No such carve out is offered in the TPP.

Pharmaceutical reimbursement restrictions. We do not have a new leaked version of the medicine pricing chapter, which would mandate that countries give appeals to pharmaceutical companies who are unhappy with reimbursement prices that they feel do not “adequately value the patent” on their medicines. This still-secret proposal was criticized by U.S. health groups earlier this week.

Draconian Enforcement in the Digital Environment

Criminalizing private use. The U.S. TPP proposal would criminalize “significant” copyright infringement with “no . . . motivation of financial gain.” This would appear to cover, for example, a large number of copies of songs on an Ipod for personal use. US proposed section QQ.H.7, titled “Criminal Procedures and Remedies / Criminal Enforcement”, which clarifies that such criminalization must include “imprisonment” of offenders, “as well as” fines.  Under the proposed provision, criminal procedures and penalties would be applied, “even absent willful trademark counterfeiting or copyright or related rights piracy”, if the trafficking satisfies one of the three conditions. (QQ. H.7.(2)(a) – (c)).  Similar proposals in the ACTA were a prime reason hundreds of thousands of people took to the streets in protest when that secret agreement was concluded and released to the public.

“Deterrent” statutory damages. The US proposes that statutory damages be set at “deterrent” levels, rather than being merely compensatory. In other words, damages paid by users to right holders in infringement cases must be higher than the amount required to actually compensate the right holder for any loss. This raises the specter of the most controversial copyright cases in the U.S. where teenagers and their mothers have been required to pay big record companies hundreds of thousands of dollars for copying music for personal use. This standard is even more controversial for an agreement including developing countries, where copyrighted media content is regularly priced at five to ten times the U.S. price relative to income.

Opposition to compensation for enforcement abuse. The US opposes a TPP proposal for “compensation for the injury suffered” from an IP rights holder who “has abused enforcement procedures.” So IP holders get more than compensatory damages; victims of IP holder abuse get less than compensatory damages.

Retail price as a measure of damages. All the above concerns with the U.S. proposals for damages measures in the TPP are compounded by a provision requiring that courts consider the “suggested retail price” as the baseline measure for compensatory damages. This assumes that the purchaser of an infringing copy would have paid that suggested retail price (eg the $20 CD and $7,000 version of a medicine) in the first instance, even in a country (e.g. Peru or Vietnam) where the majority of the population could never have afforded that price. Say a company charges $7,000 a month for a cancer medicine in a country with a GDP per capita of $100 a month, as Bayer did with its Nexavar pricing in India. A generic enters for $30 /month, captures 80% of the market (e.g. all those unable to afford the brand) and is sued for patent infringement. The US proposal for damages would be $7,000 per generic sale (and then tripled, see above), even though that price would not have been paid by many of those who bought the generic. The brand is paid for sales it would have never made (plus attorneys fees according to another proposal) — giving it further incentive to maintain its excessive prices in the first instance and rely on litigation for further rent seeking.