The Trans Pacific Partnership (TPP) free trade agreement has generated its fair share of attention in the press as of late, as lawmakers in the U.S. and the 11 Pacific Rim partner countries debate its various provisions. Perhaps lesser known to the general public – but of central importance to intellectual property lawyers – is the discord that the agreement has engendered among partner nations over intellectual property protections.
The U.S. Congress delayed the pain of dealing with the perennial lack of progress in patent reform and its most virulent negative externality – patent trolling – by putting off consideration of the Innovation Act until September. With the Trans Pacific Partnership, however, Congress has had no such luck in avoiding the contentious issue of patent reform this summer, as it has found itself often at loggerheads with most partner countries over central intellectual property provisions contained in the initial reading of this controversial free trade act. And whereas the debate within the U.S. Congress over patent reform vis-a-vis the Innovation Act will undoubtedly take the usual form of a game of partisan checkers, the battle over how to define intellectual property protection in the TPP – with the multiple competing interests of the 12 partner nations – is more likely to resemble the 3D chess game popularized by Star Trek’s Mr. Spock.
Trans Pacific Partnership | What are the main issues of the debate?
The two primary issues of contention at the center of the debate are: 1) What should be the role of Sovereign Patent Funds (SPF); and 2) What level of intellectual property protection should be afforded pharmaceutical companies who are developing the next generation of medicines known as biologics. On both issues, U.S. lawmakers find themselves taking a contrary position from most of the other TPP partner nations. And while the U.S. stance on SPFs could be considered as being in the best tradition of the principles of free and open trade, its current position regarding the degree to which the interests of Big Pharma should be defended arguably could be seen as protectionist in nature.
In their ideal form, SPFs can serve as clearinghouses where related patent licenses could be bundled and be available for purchase by individuals or companies. SPFs in this form can thus serve as a great tool for streamlining the often daunting process of negotiating international patent law for start-ups and small businesses, and thus could be a great spur for innovation and efficiency. However, in practical terms, SPFs have become defined in most cases as “government-funded organizations that acquire and leverage patents in pursuit of national economic objectives”.
The two most important examples of the trend of SPFs operating as instruments of economic nationalism instead of serving as pools of knowledge and efficiency are in regards to the practice of retaliatory lawsuits and discriminatory licensing. The latter occurs when an SPF demands an inflated patent license fee from a competing foreign company. SPF-sponsored retaliatory lawsuits often occur when a domestic company is hit with a patent suit by a competitor of another TPP member. Frivolous or not, a SPF of the offended country often will respond with multiple lawsuits of its own against the competitor. As a result many of the worst offenders have been labeled with the pejorative title of Government-Sponsored Patent Trolls (GSPT). In both cases, the U.S. has found itself essentially alone in pressing for corrective reform. Perhaps the most powerful symbol of this difference in trade philosophy is the fact that the U.S. is the only TPP member country not to have government sponsored SPFs.
But before they label themselves as modern day incarnations of Adam Smith, U.S. lawmakers must come to terms with their apparent protectionist defense of the world’s largest pharmaceutical companies, most of whom have U.S. corporate addresses. The heart of the matter is whether the current U.S. policy of giving major pharmaceutical companies 12 years of data protection on new drugs will be expanded to the other 11 TPP countries. Most TPP member countries and international health groups are vigorously opposed to this policy. They claim that such a measure would keep drug prices high and make the new biologic medicines out of reach to the developing world. The implication is that U.S. policymakers have been captured by Big Pharma, and that this represents a clear violation of the principles of free trade that the TPP is supposed to embody.
Any attempts to compromise on this point by U.S. lawmakers may lead certain key Republicans – most likely lead by Senate Finance Committee Chairman Orrin Hatch – to withdraw their support for the TPP, potentially thwarting the passage of the agreement. So whether this circle can be squared in a satisfactory way by negotiators during the TPP deliberations is an essential indicator not only of what type of agreement will be passed, but whether it will be passed at all. Where is Leonard Nimoy when his country needs him most?
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