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Intellectual Property of the Biggest Trade Deal in History

Posted on Jul 22, 2015 in Articles

This article originally appeared in The Legal Intelligencer on July 22, 2015.

TPP. TPA. TAA. It’s been a figurative “alphabet soup” of names for international trade legislation that has recently been in the news.

The Trans-Pacific Partnership (TPP) is a proposed trade agreement between the United States and 11 other countries that together make up 40 percent of global gross domestic product (GDP). If the TPP is implemented as proposed, it will be the biggest trade deal in history. The Trade Promotion Authority (TPA) gives the U.S. president the authority to negotiate trade agreements (such as the TPP) that Congress can only approve or disaprove (i.e., amendment or filibuster is not permitted). Recently signed into law by the White House, the TPA was viewed as a necessary prerequisite for each country to ratify the TPP. Trade Adjustment Assistance (TAA) provides financial assistance to U.S. workers who lose their jobs due to production outside of the United States. In May of this year, the Senate passed the TPA bill with the TAA. The bill then moved on to the House, which passed the bill without the TAA. The Senate subsequently passed the bill without the TAA, and President Obama signed the TPA into law. While some hurdles have been overcome, the end is not in sight. A final agreement between all countries participating in TPP negotiations must be reached. Congress will then vote on the TPP, probably in the fall. It remains to be seen whether the TPP will be signed into law.

The controversy surrounding the TPP has been substantial, with supporters heralding this agreement as the pathway to substantial growth of world output, and detractors arguing that implementation will result in the loss of tens of thousands of American jobs. Yet, one other abbreviation has recently captured attention in this debateā€”IP. The IP provisions of this legislation appear to be significant, and its effects might have serious economic implications.

Many of the confidential terms of the TPP have been publicly disclosed through leaked documents, which have been made available by WikiLeaks, Politico and U.S. Rep. Darrell Issa, R-California (his website includes a link to a draft of the intellectual property provisions). It is very possible that, if ratified, the provisions of the final TPP will look different than what has been leaked to the public. Yet, what is currently known about the intellectual property chapter of the TPP is receiving attention.

One section of the TPP that has recently captured the most attention is a patent linkage requirement, which prevents regulators from approving generic drugs for market entry while there are patent issues that have not been resolved. Patent linkage was introduced into the United States in 1984 through the Hatch-Waxman Act; it exists in several other countries as well. Most TPP countries, however, do not require patent linkage. That would change if the TPP is accepted in its current form.

Supporters of this provision note the significant costs associated with the development of name-brand pharmaceuticals, and the importance of incentivizing drug companies to research and produce new drugs. Extending patent monopolies in various countries would help to achieve that goal. Opponents, however, argue that expansion of patent terms will create sufficient financial burden to medical care systems, and will deny needed drug treatments to the poor. If patent terms are effectively lengthened, then availability of lower-priced generic medications will be delayed.

Another area of concern is with regard to the TPP’s proposed protection of biologics (genetically engineered proteins that target specific ailments). Biologics are drugs that include large and complex molecular structures and are typically much more expensive to develop than traditional pharmaceuticals. Before selling biologics in the United States, biologics must be approved as safe and efficacious by the U.S. Food and Drug Administration (FDA).

To understand how the TPP could affect biologics, some definitions might be helpful. When a biologic is first created, it is called an “originator biologic.” A biologic subsequently created based on the originator biologic is referred to as a “biosimilar.” A biosimilar has a chemical structure that is similar (although not identical) to the originator biologic from which it is created. Because of the similarities, development of biosimilars generally cost significantly less than development of originator biologics.

In the United States, a biologic receives data exclusivity for a period of 12 years. This means that for 12 years the FDA cannot approve an application for a biosimilar that is based on data submitted in an originator biologic application. Of the countries negotiating the TPP, the United States has the longest time period for data exclusivity of biologics (for some of the countries involved, there is currently no data exclusivity period). Supporters for the TPP argue that requiring all of the TPP countries to agree to a 12-year data exclusivity term encourages pharmaceutical development while opponents argue that the longer time period renders medications unaffordable.

Another significant issue raised by the TPP proposals is the fact that for patents, a “best mode” requirement is not included. U.S. law requires that a patent specification include the best mode (i.e., the best means known to the inventor for carrying out an invention), but the America Invents Act provides that “a failure to disclose the best mode shall not be a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable.” Thus, the America Invents Act has severely limited the importance of the best-mode requirement. Will adoption of the TPP be the final death knell for the best-mode provision? Perhaps.

In copyrights, the TPP proposes a significant modification to current U.S. law. Currently, U.S. copyright law requires that a work be “fixed” in order to be protected. Article 4.1 of the proposed TPP, however, states that copyright holders may “authorize or prohibit all reproductions of their works, performances, and phonograms, in any manner or form, permanent or temporary (including temporary storage in electronic form).”

If adopted, this provision may have a significant effect on U.S. copyright jurisprudence.

There are also differences with current U.S. law regarding preliminary injunctions in copyright cases. The TPP would require that preliminary injunctions must be granted within 10 days. Also, to obtain a preliminary injunction, there is no requirement that the copyright holder show irreparable harm.

The current copyright term in the United States extends to 70 years past the life of the author. In other countries, the term is less. TPP would extend the copyright term in other countries to match the copyright term in the United States.

The American public will not have a clear understanding of the provisions of TPP until the final draft is released in its entirety. That dissemination will not occur until the fall, when disclosure of the TPP’s terms will be made to Congress prior to their vote. Of concern are the potential changes to intellectual property law that would have far-reaching effects. The international intellectual property community will certainly be watching closely as this story continues to unfold.

– by Lawrence Ashery

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