Last week I expressed my shock in seeing that the Trans Pacific Partnership agreement proposes to expand (or at least clarify) the ability of corporations to challenge intellectual property limitations and exceptions in so called investor-state dispute settlement (ISDS) tribunals. One source of that surprise came from my recollection of repeated meetings with USTR negotiators who assured me and others that ISDS forums were not intended to provide a means to challenge intellectual property limitations and exceptions.
I have one specific record of such a conversation to share. In September 2012, after the USTR released a fact sheet on new language for the TPP requiring “balance” in copyright legislation, Peter Jaszi, Mike Carroll and I met with USTR negotiators. In an unusual twist for such meetings, the USTR attendees agreed that the meeting would not be off the record. So we took notes and sent a letter to then USTR Ron Kirk summarizing our understandings from the meeting.
At the meeting, we asked specifically about whether the investor-state dispute settlement (ISDS) chapter could provide a cause of action for private investors to challenge the fair use doctrine in general, or particular fair uses cases. The negotiators’ answer, as reflected in our letter to Kirk, stated:
It is not the intent of the United States that the Investor-State provisions of the TPP would apply to provide causes of action for investors through the intellectual property chapter that could be used to appeal to an international tribunal fair use or other interpretations of the U.S. Copyright Act by U.S. courts. Compliance with intellectual property obligations in international agreements has been a matter of state-to-state consultation and dispute resolution, and the United States does not intend to alter that process in the TPP.
Since that meeting, the Eli Lilly case broke, a case in which Eli Lilly used the NAFTA investor chapter language in a bold effort to provide a cause of action to do just what USTR said it was against – challenge an intellectual property limitation and exception (here a restraining interpretation of Canada’s “’utility” doctrine in patent law) as violating the IP chapter of NAFTA. The applicable NAFTA investment language states:
This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with Chapter Seventeen (Intellectual Property).
Eli Lilly’s argument is that the “consistent with” language invites (indeed requires) an ISDS forum to interpret whether a particular challenged limitation and exception to IP rights is consistent with the IP chapter. We felt assured by USTR that it would not.
The TPP agreement would be the first free trade and investment treaty entered since the Eli Lilly case was filed under NAFTA. It thus provides an opportunity to cut off this line of reasoning by ISDS lawyers. But we now know that, at least of January of this year, the TPP’s investment language is worse than NAFTA on IP. It states:
The (ISDS) Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights in accordance with the TRIPS Agreement, or to the revocation, limitation, or creation of intellectual property rights, to the extent that such issuance, revocation, limitation, or creation is consistent with Chapter QQ._ (Intellectual Property Rights) and the TRIPS Agreement.
Footnote: For greater certainty, the Parties recognize that, for the purposes of this Article, the term “revocation” of intellectual property rights includes the cancellation or nullification of such rights, and the term “limitation” of intellectual property rights includes exceptions to such rights.
The TPP language expands ISDS challenges in two directions. First, it invites ISDS panels to adjudicate TRIPS as well as the IP chapter. Second, the footnote clarifies that the intent to include within it its ambit — for litigation about “consistent with” issues — “the cancellation or nullification of such rights,” as well as “exceptions to such rights.”
It is time to fix the problem. If USTR’s intent is now what it was then, it should be proposing new language to ensure that ISDS tribunals do not have the power to adjudicate fair use and other limitations and exceptions cases. And if USTR won’t fix the problem, the Congress could. Our trade agreements should make clear:
Investment chapters and investor-state dispute settlement mechanisms shall not apply to any claim of indirect expropriation or fair and equitable treatment with respect to intellectual property. For further clarity, they may not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights.
The language above is based on the U.S. model BIT language, and the TPP leak, but would remove the language inviting ISDS tribunals to determine whether a particular IP policy is “consistent with” the IP chapter or TRIPS. ISDS tribunals lack such authority to interpret other regulatory minimum standard chapters. The same should apply to IP.
