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Alteration of Patent Protection Length in the Intellectual Property Provisions of Trans-Pacific Partnership Agreement

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Alteration of Patent Protection Length in the Intellectual Property Provisions of Trans-Pacific Partnership Agreement

  1. 1. 1 Alteration of Patent Protection Length in the Intellectual Property Provisions of Trans- Pacific Partnership Agreement Bradford University School of Management Karim Khayat March 2014
  2. 2. 2 I. Introduction: The Trans-Pacific Partnership (TPP) is a free trade agreement still under negotiation between 12 countries aiming at managing trade, promoting growth, and regionally integrating the economies of the Asia-Pacific region [1] The TPP is the largest-ever economic treaty, encompassing nations representing more than 40 per cent of the world's GDP [7]. According to Areerat, T. et al. (2012), the TPP's purpose was also to promote innovation, creation and retention of growth, and enhance trade and investment between the partners of the agreement. The agreement first started between the signatories New Zealand, Chile, Brunei, and Singapore in 2005, and interest arose among other countries that joined as negotiators between February 2008 and March 2013; these countries include the United States of America, Australia, Peru, Vietnam, Malaysia, Mexico, Japan, and Canada [2]. While the Trans-Pacific Partnership Agreement opens many opportunities for growth among the partners, many controversies have risen around it. Negotiation secrecy, for one, arose as a controversy since the negotiating partners did not disclose most of the agendas of the agreement. Had WikiLeaks not leaked the document to the public, much would have remained secret. Another major issue is that of investor-state arbitration, where a corporation can sue a government for breaching the treaty. However, perhaps the most important controversy arising for the TPPA is that of the intellectual property provisions, since this chapter of the TPP has wide-ranging effects on medicines, publishers, internet services, civil liberties and biological patents. This research will tackle the alteration of Patent Protection Length in the Intellectual Property Provisions of Trans-Pacific Partnership Agreement. II. The Intellectual Property Provisions of the TPP On November 2013, a complete draft of the Intellectual Property chapter was published by WikiLeaks [7] as shown, the Intellectual Property provisions of the Trans-Pacific Partnership Agreement, especially the provisions relating to the application of patents and copyrights assumed to be part of the US proposal for the TPPA are regarded as restrictive. The U.S. proposal, if adopted, would create the highest intellectual property protection and enforcement standards in any free trade agreement to date. Its provisions are primarily based on, and frequently go beyond, the maximalist and controversial standards of the Korea-US Free Trade Agreement (KORUS), the Anti-Counterfeiting Trade Agreement (ACTA) and US law, while negating the development-oriented flexibilities required by the 2007 New Trade Deal for developing countries and included in the US-Peru Free Trade Agreement [2]. If adopted, the provisions would predictably lead to higher prices and decreased access to a broad range of consumer products in many TPP member countries, from medicines to textbooks to information on the internet, with little or no benefit from increased innovation, creativity or local economic activity [3]. Furthermore, according to Flynn, S. et al. (2011), “no country, including the US, has an interest in ceding this much policy flexibility to an international agreement. The proposal is particularly inappropriate for developing countries where the risks and effects of exclusionary pricing by monopolists are most acute”. III- Summary of Article on Patents in Intellectual Provisions Chapter (Article 8): The “intellectual property” chapter in this massive trade agreement will likely force changes to copyright and patent rules in each of the signatory countries; This chapter addresses issues related to copyrights and patents in all TPP’s member countries. [10]
  3. 3. 3 According to this article, each party shall make patents available for any invention in all fields. Such invention should be new, non-obvious and useful; provided that the invention is new, involves an inventive step, and is capable of industrial application. In addition, parties confirm that “patents shall be available for any new forms, uses, or methods of using a known product; and these may satisfy the criteria for patentability, even if such invention does not result in the enhancement of the known efficacy of the product.” [14] Also, this article precises the two inventions fields in which patents availability should be satisfied: first, plants and animals. Second, diagnostic, therapeutic, and surgical methods for the treatment of humans or animals. Furthermore, it prevents any exclusion; thus, unlike TRIPS and KORUS which provide instances where a party may exclude a subject matter from patentability, TPP does not permit the exclusion of “diagnostic, therapeutic, and surgical procedures for the treatment of humans or animals”; it requires that ALL parties SHALL ensure patents availability. (Jimmy H. Koo – Dean’s Fellow – PIJIP – American University Washington College of Law). However, wikileaks published an exceptional section in which Each Party may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking into account the legitimate interests of third parties. Obligations of this chapter do not prevent any party from taking measures to protect public health by promoting access to medicines for all; especially in cases such as AIDS, malaria, and other epidemics. This chapter does not prevent the effective utilization of the TRIPS/health solution. And if an amendment of the TRIPS agreement violates this chapter, the parties shall consult to adapt this chapter as appropriate in the light of the amendment. This article states that each party shall make best efforts to process patent application and to avoid unnecessary delays; this can be done by adjusting the term of a patent to compensate for these unreasonable delays that occur in the granting of the patent. An unreasonable delay at least shall include a delay in the issuance of the patent of more than four years from the date of filing of the application in the territory of the Party, or two years after a request for examination of the application has been made. In addition, Each Party, at the request of the patent owner, shall make available an adjustment of the patent term of a patent which covers a new pharmaceutical product or a patent that covers a method of making or using a pharmaceutical product, to compensate that patent owner for unreasonable curtailment of the effective patent term as a result of the marketing approval process. Note that, a “new pharmaceutical product” means that a product at least contains a new chemical entity that has not been previously approved as a pharmaceutical product in the territory of the Party. Each Party shall provide that a patent may be cancelled, revoked or nullified only on grounds that would have justified a refusal to grant the patent. A Party may also provide that fraud, misrepresentation, or inequitable conduct may be the basis for cancelling, revoking, or nullifying a patent or holding a patent unenforceable. A Party may also provide that a patent may be cancelled, revoked or nullified on the basis that the patent is used in a manner determined to be anti-competitive in a judicial. [3]
  4. 4. 4 IV- Analysis on Article 8: Since the beginning of the TPP negotiations, the process of drafting and negotiating the treaty’s chapters has been shrouded in an unprecedented level of secrecy, and only three individuals in each TPP nation have access to the full text of the agreement. From the precedent information it is clear that the importance level of this agreement is higher than the level of any other international agreement. Narrowing our discussion to the intellectual provision of the TPP, we will find that TPP has been criticized and analyzed deeply, in particular its intellectual provision; analysis can be initially done by comparing TPP’s chapter to other agreements; ten of the FTAs have included the same language regarding that the patent should be available “for any invention, whether a product or process, in all fields of technology, provided that the invention is new, involves an inventive step, and is capable of industrial application.” Furthermore, patentability in TPP extends to “plants and animals” and to “diagnostic, therapeutic, and surgical methods for the treatment of humans or animals.”, but no other FTA extends to cover both categories. In addition TPP seems to allow for multiple amendments, since applicant may amend prior to receipt of a first patent office action or communication. This language is not included in KORUS or TRIPS which does not include a section on patent amendment. As mentioned in previous sections, there are fears that the TPP may reduce access to affordable medicines throughout the region party to the agreement. Additionally, many worry that the TPP may not be flexible enough to accommodate existing non- discriminatory drug reimbursement programs and the diverse health systems of the member countries. Note that in 2001, in the Doha declaration, all WTO members acknowledged the humanitarian costs of pharmaceutical monopoly rights and agreed that patent protections should not block access to affordable medicines. But the TPP expands patent monopoly right, facilitates abuse of the patent system, and therefore, makes monopoly stronger in a way that can reduce competition and increase drug costs for families and national health programs. The advocacy organization public citizen contends that the agreement would have a major effect on limiting access to medicine. The countries which are party to the TPP will likely see access to affordable medicines fall if the document is ratified as it stands. Major pharmaceutical companies stand to increase profits dramatically if they can diminish the ability of consumers to purchase competing low-cost companies' medications. The TPP would limit access to medicines by expanding medical patents' scope to include minor changes to existing medications; instituting patent linkage, a regime that would make it more difficult for many generic drugs to enter markets; and lengthening the terms of patents by forcing countries to extend patents' terms during lengthy review processes. Thus, when a drug is under patent –which can cut costs by 30 to 80% - cannot be brought to market. Comparing to WTO rules, which state that any new and non-obvious invention in any pharmaceutical company can obtain a 20 years patent; TPP, however, will enable pharmaceutical companies to extend the length of their patents beyond 20 years. In addition, TPP allows these companies for re-patent medicines that already exist, thus are not necessary inventions. Also, it blocks the registration of generic products.
  5. 5. 5 V- Conclusion: Tpp involves the participation of 12 countries from different geographical references. Those countries differ from each other’s in size, incomes, economic structure, social characteristics, and levels of development and growth. And, in order to achieve the long-term goals of such international agreement parties need to take account of those differing levels of development and needs. While harmonization of aspects regarding IP regimes is desirable, it would be a major problematic concern. Having different countries discussing issues that are “behind the border” might generate a lot of debate, and are expected to delay the pace of the negotiations; because such issues address policies that are managed and formulated domestically. So, in order to be able to engage efficiently in these negotiations, countries must first ensure that they have the proper domestic laws and policies that allow them to conform to the regulations set forth under the TPP. [13] IP chapter under TPP agreement is the most controversial chapter. Based on that "Intellectual Property can play a role in incentivizing innovation and creativity throughout the region to the benefit of both owners and users" [9], many critics arise concerning the fears that the TPP may cause an increase in prices, a low access to a broad range of consumer products in many TPP member countries, and little or no benefits from innovations. Thus, instead of benefit from this agreement rules, countries, and especially the developing countries, may suffer from its effects concerning, in particular, the public health and the accessibility to medicines. Many actions, in many countries, are taken to anti-access proposals in the Trans-Pacific FTA. Peru has publicly announced it will yield “not one centimeter more” to U.S. demands on trade and health, and influential new partners such as the Malaysian AIDS Council have publicly criticized the agreement. Coalition work has also led to a new U.S. government initiative on access to medicines that, while substantively flawed, testifies to the growing influence of the access to medicine movement. In the light of how IP could be interpreted and how it can influence countries and people, TPP negotiations might take more time than expected and more critics than any other agreement. Bibliography: 1. AREERAT, T., KAMEYAMA, H., ITO, S. and YAMAUCHI, K., (2012) Trans Pacific Strategic Economic Partnership With Japan, South Korea and China Integrate: General Equilibrium Approach. American Journal of Economics and Business Administration [Internet], 4(1), pp. 40-46. Available from: < 1?accountid=17193> [Accessed 3 March 2014] 2.Flynn, S., Kaminski, M. E., Baker, B.K.; and Koo, J. H., (2011) Public Interest Analysis of the US TPP Proposal for an IP Chapter. PIJIP Research Paper Series.
  6. 6. 6 Available from: < > [Accessed 3March 2014] 3. Flynn, S., Kaminski, M. E., Baker, B.K.; and Koo, J. H., (2012) the U.S. Proposal for an Intellectual Property Chapter in the Trans-Pacific Partnership Agreement. PIJIP Research Paper Series Available from: < > [Accessed 3March 2014] 4. Ranald, P., 2011. The Trans-Pacific Partnership Agreement: Contradictions in Australia and in the Asia Pacific Region. The Economic and Labour Relations Review: ELRR [Internet], 22(1), pp. 81-98. Available from: < ?accountid=17193> [Accessed 3March 2014] 5. Trans-Pacific Partnership Negotiations Begin. 2010. Foreign Policy Bulletin, 20(2), pp. 227- 246. Available from: < ?accountid=17193> [Accessed 3 March 2014] 6. Jimmy H. Koo – Dean’s Fellow – PIJIP – American University Washington College of Law 7. 8. 9. 10. 11. 12. April-2011.pdf 13. 14.
  7. 7. 7 Appendix Ӏ An example of such increase in medicine prices, the “Olanzapine 10 mg”, which is a treatment against schizophrenia and mental illnesses. Comparing the price of this drug in the Peru, with and without patent protection, we note that, in 2008, in a market with 20 competitors, the treatment cost 0.79 PEN per tablet. After the patent holder enforced its patents against competitors, the cost reached 16.95 PEN per tablet, more than 21 times the price under competition, as shown in image 1 in appendix I [9] . Many major harmful consequences may result from the TPP chapters; starting by the increase of medicines prices discussed earlier, and passing by numerous other effects such as: i. Expand pharmaceutical patenting and create new drug monopolies; this effect is the result of lowering patentability standards, and requiring patentability of old, known drugs. ii. Lengthening drug monopolies; by extending patent terms iii. Eliminate safeguards against patent abuse; a third party that has the right to challenge patent application. iv. Risk facilitating patent abuse; by requiring countries to condition marketing approval on patent status. v. Expand exclusive control over clinical trial data; including through an extra three years of data exclusivity for new uses of known products. If brand-name companies obtain expanded monopoly rights for pharmaceuticals through the TPP, generics manufacturers worldwide will have reduced market opportunities in TPP countries and therefore fewer incentives to produce affordable lifesaving treatments such as cancer drugs. The lost economies of scale could limit the global competition needed to help make medicines affordable for a majority of the world’s people. Threatening access to affordable cancer treatments and other biologics, TPP rules confront more and more with human rights, and the ability of each person to get the needed treatment and therefor to have the right to live. “Data exclusivity” under TPP, which provides a company with an absolute monopoly for a determined period after its product receives marketing approval, is a major threat. Thus, under data exclusivity, the authority cannot rely on the clinical test of some companies to determine safety and efficacy. The patient must duplicate the time consuming and expensive clinical trials even though the results are already known, or he has to wait until the end of the data exclusivity period. So, TPP would block access to the more affordable therapies by preventing biosimilars manufacturers, generic versions of biologics, from entering the market. In addition to put the lives of patients at risk, exclusivity may also threaten the financial stability of government health programs; for example, in the U.S., the use of biologics therapy can cost up to $400,000 annually. These high costs are caused primary by exclusivity protections in U.S. laws that block market entry for more affordable biosimilars. Blocking access to biosimilars could result in a global health crisis, because the global cancer burden is expected to increase, making treatment cost to rise also. So either people will suffer and die or government will experience poverty and bankruptcy. [9]
  8. 8. 8 Figure 1: Price comparison of Olanzapine (10mg) with and without patent protection, Peru This chart above, show the excessive increase in medicine price (olanzapine 10 mg.) in Peru when a patent enforcement Tooke place. 0 5 10 15 20 ~20 competitors under patent price per tablet (Pen) price per tablet (Pen)