In preparation for my role in warming up for Noam Chomsky on WORTFM Madison Wisconsin today, I put together this FAQ on the TPP ISDS leak and intellectual property policy concerns. As with all our posts, this is a CC-By product — please feel free to use or adapt for other purposes with attribution.
What is the core concern with ISDS?
A letter released today by constitutional law professors and judges describes the concern well — the core concern with ISDS is that laws and regulations enacted by democratically-elected officials are subject to challenge in a process that is insulated from democratic input.
It does this by using incredibly broad regulatory takings language and allowing that language to be interpreted and enforced in secretive courts that are only available to foreign investors and are not subject to any of the common checks and balances of a judiciary in a democratic country. For example,
- Judges in ISDS cases are practicing lawyers that can represent clients in other cases, raising structural conflict of interest concerns.
- There are no appeals on matters of law.
- They are not required to follow the interpretations of domestic courts or follow the US constitution.
- They often operate in secret, even with secret judgments.
Dizzy Yet? The Spin on Investor State Dispute Settlement Just Doesn’t Stop
Is there an increasing threat from ISDS cases?
Yes – there is a clear increase in the use of the forum to challenge domestic regulations. Between 1987 and 1992 (6 years), one investor-state case was filed. Between 2009 and 2013 (5 years), 242 ISDS cases were filed. (Economist)
Why is an intellectual property academic worried about ISDS?
In a recent development, ISDS provisions are being used to challenge the limitation of IP rights.
Eli Lilly is challenge Canada’s invalidation of patent extensions for new uses of two medicines originally developed in the 1970s.
Philip Morris is challenging Uruguay’s regulation of advertising on cigarette packages as an “expropriation” of their trademarks.
The leak of the Investor State Dispute Settlement (ISDS) chapter proposed for the Trans Pacific Partnership (TPP) agreement shows that it would expand rights of private companies to challenge limitations and exceptions to copyrights, patents, and other intellectual property rights.
Instead of combatting the ability to bring cases such as Eli Lilly’s, it invites them.
http://infojustice.org/archives/34253
Would the fast track bill help correct the problem?
The Trade Promotion Authority Bill announced recently would approve the TPP language and require no modification of it. At the same time, it creates a smokescreen by claiming to insulate the US from dispute settlement panel decisions. But the language will have no legal effect.
There, the bill claims to be able to render findings by dispute settlement panels with “no binding effect” on the law or “the Government” of the U.S. The key here is that international law, not U.S. law, decides the extent to which international treaties bind and the scope of remedies available.
http://infojustice.org/archives/34298
Is this new?
These kind of claims are a rupture in the fabric of international intellectual property law. State-to-state enforcement has been the norm for the last 130 odd years of international intellectual property law, from the first multilateral treaties on copyrights and patents in the 1880s up through the World Trade Organization’s agreement on Trade Related Intellectual Property Rights (TRIPS).
State-to-state dispute settlement is an important check and balance in the process that reduces litigation. Governments are more wary litigators than many companies. The reasons are many – governments seek to maintain complex diplomatic relations, they are loathe to take on the costs of litigation, and since they must live by the rules their own litigation establishes, they are more cautious in taking aggressive interpretations of international law that could limit their own regulatory freedom. We thus see relatively few international intellectual property cases litigated, including under the 20 years of TRIPS and its stronger enforcement forum in the WTO.
This restraint is good. Imposing international disciplines on what kind of domestic policies a country can have – the vertical relationship between state and citizen rather than state to state — is controversial and against what most of international law seeks to do.
Where does ISDS come from?
“Investor-state dispute settlement” (ISDS) proceedings began as limited exceptions to the general rule of state-to-state enforcement. ISDS regimes evolved from an international customary law right to compensation for the expropriation of property through nationalizations of foreign assets.
NAFTA was the first free trade agreement to include both an intellectual property chapter (Chapter 17) and an investment chapter (Chapter 11). NAFTA exempts IP decisions from ISDS adjudication – but only if “consistent with” the IP chapter – opening the door for private litigation of the IP chapter.
It also expanded ISDS systems to include “indirect” takings. That is why you see the litigation spike after NAFTA.
What is the problem with litigating IP through ISDS?
The implications of using ISDS systems to privately enforce consistency with free trade agreement intellectual property chapters are profound. The most recently leaked IP chapter of the Trans-Pacific Partnership Agreement is 77 pages long with 7 annexes, addendums, and non-papers, 32,018 words, including 265 footnotes. http://www.keionline.org/node/2108 These words can give rise to legions of disputes about their meaning, especially when the meaning of the words can affect the bottom line of well-resourced companies. Do we really want all of those disputes to be capable of being heard in an ISDS tribunal?
We can predict some disputes. Each year, the U.S. Trade Representatives holds an open forum for U.S. industry to make complaints about other countries intellectual property systems, leading to the so-called “Special 301 report.” Peruse this year’s industry submissions and you will find dozens of complaints that foreign governments are not adhering to their treaty rights on issues ranging from establishing internet service liability rules to extending patent and data monopoly rights for medicines.
Many copyright intensive industries are hostile to the U.S. fair use doctrine and many of the decisions of courts emanating from it. There have been arguments raised from time to time that the doctrine or its applications are contrary to the so-called Berne 3-step test requiring that limitations and exceptions to rights be limited to certain special cases, not conflict with a normal exploitation of the work and not unreasonably prejudice the legitimate interests of the author. No other country has attempted to sue the U.S. or the nearly a dozen other countries around the world that have fair use. But will the content industry be so reticent with such challenges in the future?
