TPP: a longish peep at patents

Now that we've looked at the bits of the wikileaked text of the Trans-Pacific Partnership that govern its General Provisions (by Alberto Bellan, here), Copyright (by Angela Daly, here), and Trade Marks (again by Alberto Bellan, here), it's time for patents -- and who better than our good friend, PatLit blogger and former guest Kat Stefano Barazza, to take on the subject for us.  This is what Stefano says:

Although the draft IP chapter of the TPP contains a whole section (QQ.E) dedicated to patents, the terms of the debate between the negotiating parties are nicely summarized right at the beginning of the chapter, in the general provision of Article QQ.A.2. The text proposed by nine countries, and opposed by the United States and Japan, reads as follows:

The objectives of this Chapter are:
(a) enhance the role of intellectual property in promoting economic and social development, particularly in relation to the new digital economy, technological innovation, the [PE: generation,] transfer and dissemination of technology and trade;
(b) reduce impediments to trade and investment by promoting deeper economic integration through effective and adequate creation, utilization, protection and enforcement of intellectual property rights, taking into account the different levels of economic development and capacity as well as differences in national legal systems;
(c) maintain a balance between the rights of intellectual property holders and the legitimate interests of users and the community in subject matter protected by intellectual property.  …

According to the view of New Zealand, Chile, Peru, Vietnam, Brunei, Malaysia, Singapore, Canada and Mexico, the key objective of the TPP would be to strengthen the protection of intellectual property in a manner that (i) promotes economic and social development, (ii) takes into account the different levels of economic development and capacity of the negotiating parties, and (iii) reaches a balance between the rights of IP holders and the interests of users and the community. Article QQ.A.2 bis, in the formulation proposed by some of the same parties, would further recognize the freedom of each country to adopt measures to promote the public interest in areas important for its social, economic or technological development, including public health and nutrition.

The idea of tailoring the protection of intellectual property to the characteristics, as well as to the economic and social objectives, of national legal systems is not new. Articles 7 and 8 of the TRIPS Agreement afforded similar flexibility to its members, albeit avoiding to explicitly recognize that different levels of economic development and capacity could impact the protection of IP. The preamble of the Marrakesh Agreement, which established the World Trade Organization, clearly stated that its objectives included ensuring that developing countries earned a share in the growth in international trade ‘commensurate with the needs of their economic development’. A recent study suggested that ‘the design and strength of intellectual property systems should be tailored to the indigenous technological capabilities of firms in order to best provide the appropriate incentive for innovation’. And the same perspective has been highlighted in recent reform proposals in Brazil and South Africa, where a harmonized worldwide level of patent protection was criticized due to the potential negative effects on the development of national industries (see Brazil here - page 9).

The opposition of US and Japan towards the proposed formulation of Article QQ.A.2, which purports to state the objectives of the IP policy of the TPP, exposes the debate that we can subsequently encounter in the section dedicated to patents. How high should the bar be raised? Of course, the divergence between the interests of most of the negotiating parties, on one side, and the US and Japan, on the other, is significant. While the latter already enjoy a strong system of patent protection, the former are caught between the need of strengthening their patent laws with a view to attract foreign investments and increase their share in international trade, and that of protecting their national economic and social needs. It’s certainly not a new dilemma, yet it poses a challenge that the TPP negotiators need to take into account, and which is clearly highlighted in the draft IP chapter of the agreement.

Articles QQ.A.4 and 5 reaffirm the commitment of the negotiating parties to the Declaration on the TRIPS Agreement and Public Health, adopted in 2001 during the Doha WTO Ministerial meeting, recognizing that the TPP should not interfere with ‘the effective utilization of the TRIPS/health solution’.

Article QQ.A.6 disciplines the relationship between the TPP and existing international agreements relating to intellectual property to which the parties already belong. Essentially, most of the negotiating parties, although through different formulations of the article, suggest that the TPP should not limit the rights that they enjoy in light of pre-existing international agreements, in particular the flexibility afforded with respect to the protection of equal access to knowledge, food and public health. The US, on the contrary, take the view that the TPP may derogate to existing agreements and propose that each party should also ratify or accede to a number of international treaties.

Section B aims to establish three forms of cooperation between the parties. The first, opposed by the US, concerns cooperation in the implementation of international agreements, in the form of the assistance that a party, which is also a member of an international agreement, should provide, upon request, to another party that intends to accede to or implement that agreement. The second encompasses any cooperation activity which facilitates the coordination, training and exchange of information between the respective intellectual property offices of the parties. The third, under the heading of ‘patent cooperation’, proposes the sharing of search and examination work between the patent offices of the parties. The information shared would include search and examination results, as well as quality assurance systems and quality standards related to search and examination. Japan suggests that patent cooperation should also be used to decrease the procedural costs borne by the applicant, by abstaining from requiring to submit search and examination results made available by the patent offices of other parties.

The section on patents, once again, exposes the same debate already noted at the beginning. Article QQ.E.1 defines the patentable subject matter in accordance to Article 27 TRIPS. According to the US, however, the parties should also confirm (i) that patents shall be available for any new uses or methods of using a known product (Australia agrees), and (ii) that they may not deny a patent solely on the basis that the product did not result in enhanced efficacy of the known product, when the applicant has set forth distinguishing features establishing that the invention satisfies patentability requirements (Japan agrees). All the other negotiating parties oppose both provisions. As mentioned above, in the past few months several countries, including Brazil and South Africa, discussed the negative effects that similar provisions have on the development of local industries in developing countries. It is plausible to imagine that some of the negotiating parties share these concerns, while others are reported to have raised concerns on the risk of evergreening practices.

The US also propose the adoption of the following text:

[E]ach Party shall make patents available for inventions for the following:
(a) plants and animals,
(b) diagnostic, therapeutic, and surgical methods for the treatment of humans or animals if they cover a method of using a machine, manufacture, or composition of matter,
(c) essentially biological processes for the production of plants or animals, other than non-biological and microbiological processes for such production.

The other negotiating parties, excluding Japan, take the opposite approach, suggesting that the parties should be free to exclude those categories of inventions from patentability (including any diagnostic, therapeutic and surgical method, irrespective of its relation to a method of using a machine, manufacture or composition of matter). The basis for the rejection of the US proposal can be found in Article 27.3 TRIPS, whose flexibility is echoed in other international agreements (e.g. Article 53 of theEuropean Patent Convention).

Article QQ.E.2 excludes any public disclosure made by the applicant or by a person who obtained information from the applicant, if this occurred within 12 months from the date of the application, should be disregarded when evaluating novelty and inventive step.

Article QQ.E.3 deals with the basis for cancellation, revocation or nullification of a patent; the US and Japan oppose a formulation which recognizes the freedom of the parties to cancel, revoke or nullify a patent which a court found to have been used in an anti-competitive manner.

Articles QQ.E.5 bis, ter and quater, proposed by five negotiating parties (NZ/CA/SG/CL/MY), would create exceptions to the exclusive rights conferred by a patent when a third party commits a potentially infringing act (i) for purposes connected with the collection and submission of data in order to comply with the regulatory requirements of that party or another country, including for purposes connected with marketing or sanitary approval, (ii) for experimental purposes (e.g. to determine how the invention works, its scope, the validity of its claims, etc.), (iii) without the authorization of the patent holder, but within the framework of Article 31 TRIPS.

Article QQ.E.6 binds the parties to adopt a first-to-file system; the parties disagree on whether the patent application should have been published or not.

The following provisions show that there is also some disagreement on the perimeter of disclosure and on the notion of ‘usefulness’ (which, according to footnote 87, is considered as synonymous with ‘capable of industrial application’). The US and Australia, inter alia, propose that: (i) ‘a disclosure of a claimed invention shall be considered to be sufficiently clear and complete if it provides information that allows the invention to be made and used by a person skilled in the art, without undue experimentation, as of the filing date’ (Article QQ.E.8), (ii) a claimed invention should be sufficiently supported by its disclosure as of the filing date (Article QQ.E.9), (iii) a claimed invention is useful if it has a specific, substantial and credible utility (Article QQ.E.10). Most of the negotiating parties oppose these proposals.

Chile would also like the TPP to encourage the parties to establish international exhaustion of patent rights. 'For this purpose', according to the lonely proposal of Article QQ.E.X, 'the registration of a patent shall not entitle its holder to prevent third parties from making, using, offering for sale, selling or importing a product protected by that patent, which has been put in the market in any country by the patent holder or with his consent'.

With Article QQ.E.XX, we enter in the area of most intense debate within the TPP’s chapter on patents. Essentially, as suggested above, the debate focuses on the margin by which patent protection should be increased in the TPP’s countries. Thus, the most controversial provisions concern (i) the extension of the exclusive rights conferred to patent holders in relation to unreasonable delays in the granting of a patent (Article QQ.E.XX) or unreasonable reduction of the effective patent term as a result of the marketing approval process (Article QQ.E.14), (ii) exceptions related to the use, by a third party, of the subject matter of a subsisting patent to support an application for regulatory or marketing approval (Article QQ.E.13), (iii) the protection of safety or efficacy information whose origination involved a considerable effort, as well as of clinical information pertaining to an existing pharmaceutical product, in relation to the process of obtaining regulatory or marketing approval (Articles QQ.E.16, 17, 18 and 19).

Article QQ.E.XX, proposed by the US and opposed by Canada, Japan and New Zealand, states that ‘[e]ach party, at the request of the patent owner, shall adjust the term of a patent to compensate for unreasonable delays that occur in the granting of the patent’. The notion of unreasonable, according to the US, would comprehend a period of more than four years between filing and issuance, or of more than two years between a request for examination and issuance.

Article QQ.E.13, whose formulation is widely debated by the party, essentially allows the parties to permit a third person to use the subject matter of a subsisting patent to support an application for marketing approval of a product. The negotiating parties are discussing whether the exception should (i) be compulsory or not, (ii) encompass regulatory approval or sanitary permit, (iii) concern specific categories of products (pharmaceutical or agricultural chemical substances), (iv) extend to the use of the subject matter for marketing approval in other countries. It is probably easier to quote the relevant provision, than to attempt to summarize the debate any further:

[US/NZ/PE/CA/MX/JP propose: Consistent with paragraph [QQ.E.5] (patent exceptions and limitations), each Party shall permit] [CL/SG/MY/AU/VN/BN propose: Where a Party permits] a third person to use the subject matter of a subsisting patent to [US/NZ/PE/AU/MX/VN/BN/JP] propose: generate information necessary to] support an application for [AU/CA/MX/VN/BN propose: regulatory or] marketing approval [CL/NZ/PE/SG/MY/AU/CA/MX/VN/BN propose: or sanitary permit] of a [AU/CA/VN/BN oppose: pharmaceutical] product [PE propose: or agricultural chemical product], [US/NZ/PE/SG/MY/MX/JP propose: and shall further] [CL/AU/CA/VN/BN propose: that Party may also] provide that any product produced under such authority [CL/AU/CA/VN/BN propose: may be] [US/NZ/PE/SG/MY/MX/JP propose: shall not be] made, [CA propose: constructed,] [CL/PE/VN/BN propose: offered for sale], [PE/VN/BN propose: imported,] used, or sold in its territory [US/NZ/PE/SG/MY/MX/JP propose: other than] for purposes related to [US/NZ/PE/AU/MX/VN/BN/JP propose: generating such information to support an application for] meeting [AU/CA/MX/VN/BN propose: regulatory or] marketing approval [CL/NZ/PE/SG/MY/AU/CA/MX/VN/BN propose: or sanitary permit] requirements of that Party [NZ/SG/MY/AU/CA/MX/CL/VN/BN propose: or another country]. [Merpel says "I agree!"]

Article QQ.E.14, which is once again a US proposal opposed by all the other negotiating parties except Japan, deals with the extension of the patent term for patents which cover new pharmaceutical products or methods of making or using pharmaceutical products, to compensate for ‘the unreasonable curtailment of the effective patent term as a result of the marketing approval process’. The rule, according to the US proposal, would be surrounded by requirements aimed at preventing its abuse (a five-year extension limit, not linked to the patent term - Article QQ.E.22 -, an obligation to start the process of marketing approval within a predefined number of years from the date of the first marketing approval in another TPP country – see also Article QQ.E.19).

The US also propose, against the opposition of most of the other parties, to protect the information concerning the safety of efficacy of a pharmaceutical substance, submitted by a patent holder in order to obtain marketing approval for a new pharmaceutical product, if their origination involved a considerable effort (Article QQ.E.16). In this case, the proposal states that, for a period of at least five years from the date of marketing approval, the party should not authorize a third person to market the same or a similar product based on the safety or efficacy information previously submitted in support of the marketing approval, or on evidence of the existence of the prior marketing approval. The same provision would apply to information related to a product previously approved in another territory. 

A similar protection, but for a reduced period of at least three years, would also be guaranteed to the submission of new clinical information (except those related to bioequivalency) essential to the approval of a pharmaceutical product that contains a chemical entity previously approved for marketing in another pharmaceutical product. The recognition of a period of data exclusivity would also justify the creation of a system for its enforcement (QQ.E.17).

New Zealand, Canada, Singapore, Chile, Malaysia and Vietnam advanced a series of proposals which include: (i) the recognition of the right of each party to adopt or maintain measures to encourage the timely entry of pharmaceutical products to the market (Article QQ.E.XX.1), (ii) a commitment to streamline and improve the quality and efficiency of national patent systems (Article QQ.E.XX.2), (iii) a commitment to attend to the examination of patent applications, as well as of applications for marketing, regulatory or sanitary approval of pharmaceutical products, in an efficient and timely manner (Article QQ.E.XX.3), (iv) a generic obligation to address unreasonable delays in the processing of applications for patents or marketing approval. These countries also propose that undisclosed data, related to the marketing, regulatory or sanitary approval of pharmaceutical products which utilize new chemical entities, should be protected against unfair commercial use, when their origination involved a considerable effort (Article QQ.E.XX.4). According to the proposal, each party would enjoy significant freedom in personalizing the protection of these data.

Agricultural chemical products are the subject of Article QQ.E.XXX, whose text is proposed by the US, in conjunction with other negotiating parties, including Japan, and opposed by New Zealand and Vietnam. The provision, which is similar to that of Article QQ.E.13, protects safety and efficacy information related to new agricultural chemical products, preventing third persons from relying on those data, or on the prior approval, to obtain marketing approval for same or similar products, for a period of ten years. The parties, however, have not yet reached a consensus on the perimeter of this protection, as they are still discussing issues parallel to those examined above in relation to Article QQ.E.13.

Article QQ.E.23 contains provisions dealing with traditional knowledge, traditional cultural expressions and genetic resources. Not all the negotiating parties appear to be willing to include significant rules on the matter in the TPP. A degree of consensus was attracted by the provisions that recognize:

-          the right of the users of genetic resources of traditional knowledge associated with genetic resources (i) to obtain prior informed consent to access genetic resources, (ii) to access traditional knowledge associated with genetic resources with the prior informed consent or approval and involvement of the indigenous or local community holding such knowledge, and (iii) to equitably share the benefits arising from the use of genetic resources and traditional knowledge associated with genetic resources on mutually agreed terms;

-          the usefulness of the information about genetic resources and traditional knowledge associated with genetic resources for assessing patent applications and patent eligibility, as well as the opportunity of taking into account the existence of these information when examining prior art;

-          the necessity of cooperating ‘to enhance understanding of how the intellectual property system can deal with issues associated with traditional knowledge, traditional cultural expressions and genetic resources’.

Finally, another interesting provision of the TPP concerning patents is hidden in section H, among rules on the enforcement of IPRs. The US, in Article QQ.H.4.Y, propose the adoption of the following text, which is opposed, as usual, by all the other negotiating parties (none excluded!):

In civil judicial proceedings concerning patent infringement, each Party shall provide that its judicial authorities shall have the authority to increase damages to an amount that is up to three times the amount of the injury found or assessed.

At this stage, it is difficult to perceive the TPP rules on patents as the fruit of a coherent project, as there appears to be a clear cut between the interests and objectives of the US (and, perhaps, Japan) and those of the other negotiating parties. In light of the current debate on patent law in many developing countries (India, Brazil, South Africa), which is calling into question the opportunity of adopting harmonized standards of enhanced patent protection (those related, for example, to the patentability of new uses of known substances or to the provision of data or clinical exclusivity), the TPP should probably be seen as an occasion to provide low-level uniformity among the IP systems of its parties, rather than as a chance to implement drastic changes which do not appear to be in line with the economic and social structure, as well as with the expectations, of most of the negotiating parties.