The Problem of Patent Protection

As negotiations progress, members are drawing lines in the TPP sand box that will determine the dynamics of future negotiating rounds. When it comes to patent protection for pharmaceuticals, these lines are deep and divisive.. Although patent issues for pharmaceuticals were not discussed in the recently-concluded Auckland round, they are likely to be on the agenda for the next round of negotiations in Singapore in March 2013.

Discussion on patent protections has been delayed since the U.S. withdrew its initial proposal in the face of strong opposition from TPP partners. That proposal included an increase in the scope of products for which patents can be obtained, a decrease in exclusions from patent law so that patents could be applied to diagnostic, therapeutic or surgical treatments, and patent-term restoration, a provision that extends patent life to compensate patent holders for marketing time lost during the approvals process. In some areas, the initial U.S. proposal exceeded the protections of the U.S.-Korea Free Trade Agreement, considered to be the United States’ highest level of IP protection to date.

The Americans are setting the bar high, attempting to lock in the standards for intellectual property that future TPP participants will have to meet. However, the proposal is unlikely to win favour with current TPP members including Australia, Malaysia, and Vietnam. Recently, even Chile’s chief negotiator has stated that his country may table a new proposal on patents given its objections to the U.S. proposal.

In a bilateral arena, any individual TPP member would be hard-pressed to move the U.S. position, and as a result would likely acquiesce to its demands. However, if TPP members remain united in their opposition, then we might see room for the U.S. to compromise. The U.S. IP proposal will also have to be balanced against its other interests, such as the equally controversial proposal on state-owned enterprises (SOE).

For many TPP members, the promise of an agreement with the U.S. is a huge prize. But the TPP is not the only game in town. The Regional Comprehensive Economic Partnership (RCEP), the ambitious project of the ASEAN Plus 6, offers an attractive alternative for liberalizing trade among some of the world’s fastest-growing economies, including China, India, Japan, South Korea and others. And some of the countries involved in TPP negotiations are also members of the RCEP-Malaysia, Singapore, Vietnam, New Zealand, and Australia. There is a risk that some of these members may find that their interests and positions are better represented in the RCEP.

The U.S. may have an ally in Canada when it comes to IP, but the devil is in the details. Canada and the U.S. are quite similar in some areas of patent protection. For example, Canada provides strong protections on data exclusivity (referring to the period of time that a generic drug company is prohibited from using the original drug maker’s clinical data to obtain marketing approval from Health Canada), but has yet to offer some of the protections that the U.S. has in place, such as patent term restoration. Canada’s position on IP will be informed by the outcome of its negotiations with EU, and will set the bar for what Canada is likely to agree to in the TPP.

Decisions on complex questions of patent protection will not be settled until the TPP’s 11th hour but given the vastly divergent views on the subject, you can bet on a good show in the meantime.

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