With the working text (comprising 30 Chapters, multiple Annexes, over 100 bilateral side letters, and well over 5,500 pages) of the 12-country TransPacific Partnership Agreement (TPP) released to the public last month, the Obama Administration has embarked on the task of demonstrating to a skeptical Congress, industry groups, and to the American public how the TPP has achieved its ambition of a “21st Century Agreement.” Provisions of the intellectual property rights (IPR) chapter were among the final hurdles to reaching agreement on the TPP text in October and will remain at the forefront of the debate over whether the United States should implement the text as-agreed, or return to the negotiating table for further revision. Below we review the key provisions of the IPR chapter and TPP’s prospects for signature, Congressional, implementation and entry into force.
Once implemented, the agreement among 12 Pacific Rim countries – Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam – will create an integrated regional economy accounting for 40 percent of global GDP. Approximately 98 percent of U.S. industrial and consumer exports to the new TPP countries will be eligible for immediate, duty-free treatment. In addition to tariff reductions, the TPP contains numerous provisions aimed at eliminating trade friction between TPP partners and imposing new disciplines on the “behind-the-border” trade barriers that have impeded the export growth of U.S. companies operating in heavily-regulated industries. Many of these provi- sions, including certain provisions of the IPR chapter, are considered “WTO plus” provisions because they impose obligations that exceed current obligations under the World Trade Organization Agreements.
The Intellectual Property Rights Chapter
According to the Office of the U.S. Trade Representative, the IPR chapter will “promote high standards of protection, safeguard U.S. exports and consumers against IP infringement, and provide fair access to legal systems in the region to enforce those rights.” The Chapter affirms international norms drawn from the WTO Agreement on TradeRelated Aspects of Intellectual Property Rights (TRIPS) as well as other international best practices, including relevant exclusions. The TPP also commits each party to ratify or accede to a common set of international agreements governing IPR. The chapter contains transition periods for implementation of certain commitments, taking into account each Party’s level of development and capacity as well as its existing laws and international obligations. We review some of the key features of the TPP IPR chapter text below.
Patents. With respect to Patents, the IPR chapter includes commitments to:
- establish a 12-month grace period in which certain public disclosures of an invention will not be used to deny a patent application;
- help facilitate the processing of patent applications in multiple jurisdictions, with minimum duplication of efforts; and
- provide for an adjustment to patent terms for pharmaceuticals products to compensate for unreasonable curtailment of patent terms due to the marketing approval process
Protection for Regulatory Test Data. The IPR chapter protects undisclosed test and other data generated to obtain marketing approval of pharmaceuticals and agricultural chemicals. For biologics, the United States was unable to secure the 12-year data exclusivity period sought by industry. The chapter provides for a minimum 5 to 8 years of data exclusivity. Nevertheless, implementation of the biologics provisions will require changes to the laws of Brunei, Malaysia, Mexico, Peru, and Vietnam. The U.S. failure to secure the 12-year data exclusivity period remains a controversial issue for key industry and Congressional factions.
Trademarks and Geographical Indications (“GI”). With respect to Trademarks and GI, the IPR chapter includes commitments to clarify and strengthen protection of brand names and other signs or symbols used to distinguish goods or services, prevent the overprotection of geographical indications by providing opportunities for due process and requiring guidelines on how to determine whether a term is generic in its market; and ensure efficient and transparent procedures governing trademark applications, including electronic trademark registration mechanisms and promotion of regional harmonization of trademark systems.
Domain Name Cyber-Squatting. In an effort to reduce domain name cybersquatting, the TPP ensures that, in connection with a Party’s countrycode top-level domain name registration system, appropriate remedies are available in cases of bad faith registration of domain names that are confusingly similar to registered trademarks.
Copyright. The IPR chapter’s copyright provisions:
- “include strong and balanced provisions on technological protection measures and rights management information, and advance transparency in systems for copyright royalty collection;”
- promote exceptions and limitations to copyright for legitimate purposes, such as criticism, comment, news reporting, teaching, scholarship, and research; and
- obligate each Party to establish copyright safe harbors for Internet Service Providers (with safeguards against abuse of such regimes).
Trade Secrets. The IPR chapter requires each Party to provide for the legal means to prevent misappropriation of trade secrets, including misappropriation conducted by state-owned enterprises (SOEs). It also requires for the first time in a U.S. free trade agreement that each party establish criminal procedures and penalties for trade secret theft.
Enforcement. The IPR chapter contains commitments that seek to:
- ensure the availability of mechanisms to enforce intellectual property rights, including border measures and criminal enforcement (including new disciplines on camcording in movie theaters and theft of encrypted program-carrying satellite and cable signals); and
- close loopholes used by counterfeiters and enhance penalties against trafficking in counterfeit trademark products that threaten health and safety.
Other Provisions Related to IPR
In addition to the provisions contained in the IP chapter, the Technical Barriers to Trade (TBT) includes several provisions that bear noting in the context of IPR. The TBT chapter seeks to ensure that standards, conformity assessment procedures, and technical regulations are fair and transparently developed, with opportunities for meaningful input from stakeholders. It includes provisions that increase transparency and opportunities for stakeholder input, limit the information required with respect to proprietary formulas for prepack aged foods and food additives, and establish rules regarding the labeling of wines and distilled spirits.
Next Steps for TPP
On November 5, 2015, President Obama formally notified Congress of his intent to sign the TPP, an action required by the fast-track procedures. Under fast track, this notification triggered a 90-day Congressional review period during which Congress reviews the text, after which the President may formally sign the Agreement. There is reportedly a consensus building around a proposal to sign the agreement on February 4 in New Zealand.
Trade agreements are not self-executing under U.S. law. Rather, such agreements must be implemented through legislation. Within 60 days of signing TPP, the President must submit to Congress a description of any required changes to existing laws. At least 30 days before formally submitting the TPP legislation to Congress, the President must provide Congress a copy of the final legal text and draft SAA proposed to implement the agreement. Within 60 legislative days of the introduction of implementing legislation, the House of Representatives holds an up-ordown vote (no amendments are permitted under fast track). Within 90 legislative days of introduction of implementing legislation, the Senate holds its vote (up-or-down).
The International Trade Commission (ITC) then has 105 days to complete its analysis of the impact of the TPP agreement on the U.S. economy. The ITC has initiated this investigation and expects to transmit its report to the President and Congress on May 18, 2015. Even if the President were to submit formal implementing legislation and draft statement of administrative action (SAA) language as soon as the ITC analysis is completed, passage before the end of the year is unlikely given the much abbreviated election-year calendar in the House and Senate. Based on current schedules, the House only has 59 legislative days and the Senate 77 legislative days, before the end of the year.
At the end of the day, timing will depend on whether and when there are sufficient votes to pass TPP. Much will turn on whether the President is able to convince a sufficient number of Congressional Democrats to support his trade bill to overcome those Republicans that will oppose passage. Sen. Orrin Hatch, who as Chairman of the Senate Finance Committee will be key to passage of TPP, has also expressed his concern about the substance of the deal, in particular the exclusivity period for IP protection of biologic drugs and stated that he will push the current administration to renegotiate these provisions. The White House has advised, however, that renegotiating any aspects of the TPP will almost certainly kill the agreement. It is not unprecedented for particular provisions to be revised after conclusion of an agreement. Doing so is far from easy, however, and could unravel the delicate balance of concessions achieved in negotiations.