United States pushes for greater IPR privileges in FTAA

by Chakravarthi Raghavan

Geneva, 3 Apr 2001 -- The United States is seeking enhanced monopoly rights and privileges for its corporations, as intellectual property owners, in the proposals for the Free Trade for Americas Agreement (FTAA).

The US, and the other governments of the Americas, have been keeping the negotiating proposals for the FTAA under secrecy, and not much has been disclosed in public.

But what little is known shows that the US is seeking toucher rules in intellectual property rights and for investment rights of corporations (which are also intended to be much higher than those that were being negotiated at the OECD for a multiliateral agreement on investment).

The US proposals for IPRs under the FTAA are comprehensive.

An analysis shows that it seeks among others to provide for higher IPRs (than in the WTO TRIPS agreement) in restricting the grounds for exclusion of patentability, in having no provisions about ‘exhaustion of rights’ and parallel imports (thus enabling a property holder to lodge a complaint against parallel imports), in reducing the grounds for compulsory licensing and insisting on ‘full’ compensation.

Another provision would effectively increase the patent life for a pharmaceutical and chemical product, by requiring marketability approval for generics for at least five years, thus blocking the introduction of generic products, and requiring longer patent protection, even if a patent expires in a particular country, if there is a valid patent in another.

Though the exact details of the proposals are not available, information that has become available shows that in the FTAA provisions on IPRs, there will be no provision similar to those in Art.27.3 (b) of TRIPs, on the ability of a member to exclude from patentability’ of plants and animals and biological processes.

Under the FTAA, the only exclusion from patentability will be on grounds that such exclusion is warranted “to protect ordre public or morality or to avoid serious prejudice to the environment” or for “diagnostic, therapeutic and surgical methods”

Currently, in TRIPS, Art 39 which deals with protection of ‘undisclosed information’, has a part dealing with disclosure of information to any WTO member in relation to a request for approval of marketing of pharmaceutical or agricultural products, using new chemical entities, or submission of undisclosed test or other data. Members are required to protect such information ‘against unfair commercial use’.

In the US proposals for IPRs in the FTAA, this protection against disclosure is to be extended to protection of data required to be submitted to an FTAA member for securing approval to market a product is to extend to all products.

Under another US proposal for the FTAA in the area of IPRs, compulsory licensing can be granted only for public non-commercial purposes or in a situation of national emergency and limited solely to satisfy the requirements of government use. Remuneration for the use of the license is to be set in terms of ‘full’ compensation.

TRIPS agreement, in Art.31, allows a government to issue a compulsory licence after a potential user of the patent has negotiated and made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions. Though the ‘compulsory licensing’ issue has come up prominently in recent days in relation to the pharmaceutical patents, in patent theory and practice, there are many other problems and cases where a compulsory licence is sought. Even the existence of such a provision enables firms to negotiate better with a rights holder.

And TRIPS requires compensation to be paid to the owner of a patent in such cases to be “on the basis of economic value of the authorization”.

A new proposal of the US in the FTAA provides that members “shall defer” date of granting approval to market products to third parties (generic products) for at least five years.

Presently under TRIPS, and as a result of the rulings in the EC-Canada dispute on generic drugs, where the US Bolar exception has been applied, generic producers are allowed to undertake the necessary measures to prepare for production of a generic drug as soon as the patent expires, and undertake tests etc and submit them to the regulatory authorities to be able to obtain marketing rights as soon as a patent expires. This means that they could start production and distribute to stockholders and market the product as soon as the patent expires.

Now under the US FTAA proposal, marketing approval to third parties for generic drugs is to be delayed by atleast five years.

Another proposal of the US requires that if the patent expires in one country, but in another country there is a longer patent protection period, the latter will prevail.

This means that use of information of an expired patent is conditioned by a patent in force on the same subject in another country.

Gustav Capdevila (IPS Geneva) adds: The United States-sponsored proposal on pharmaceutical patents for inclusion in the FTAA treaty contains demands that the world’s highest international health authorities have advised against adopting.

The US initiative, to be debated at the FTAA ministerial meeting later this week in Buenos Aires, is a serious matter because it is an attempt to impose standards much higher than the ones currently in place, commented Argentine expert Carlos Correa.

The international debate on pharmaceutical patents has heated up in recent months as a result of the legal actions launched by the United States against Brazil, and 39 transnational laboratories against South Africa. The demands, brought before the World Trade Organisation (WTO) and South African courts respectively, attempt to establish absolute protection of private intellectual property involved in medical inventions.

The controversy, with the active participation of civil society groups from around the world, centres on the much-questioned WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Correa pointed out that the cases of South Africa and Brazil, alongside news about the sales policies of some pharmaceutical firms, have revealed to the international public the problems generated when the TRIPS accord is applied.

The World Health Organisation (WHO) has described TRIPS as an agreement establishing intellectual property norms for all WTO members but which are “historically based on the standards of wealthier countries.”

“Since the public health impact of TRIPS requirements has yet to be fully assessed, WHO recommends that developing countries be cautious about enacting legislation that is more stringent,” such as the requirements set by what is known as “TRIPS-plus.”

The US proposal for inclusion in the FTAA, a trade bloc to cover an area extending from Alaska to Tierra del Fuego, “is clearly TRIPS-plus,” warned Correa, a professor at the University of Buenos Aires and adviser to several developing countries on matters related to intellectual property.

Many Latin American and Asian countries, acting under bilateral pressures from industrialised countries, have already made concessions by adopting the TRIPS-plus framework, he said.

The ministers of trade and of economy in the Americas, excluding Cuba, are to gather this Thursday in the Argentine capital to negotiate the outline for the FTAA initiative, which will then be presented before the heads of state at the Summit of the Americas in Quebec City, Canada, beginning 20 April.

Among the working groups at the ministerial meeting, one will be dedicated to the matter of liberalising trade that involves intellectual property rights.

The United States hopes to extend patent life beyond the 20-year TRIPS minimum, supposedly to compensate for the time delays in approving product registration, Correa explained.

The US intent also represents a case of TRIPS-plus because it calls for exclusive rights in handling data presented for registering pharmaceutical and agro-chemical products, which would generate a monopoly situation even without the existence of a patent.

The proposal establishes stronger rights for the patent holders, including those governing imports, and drastically limits compulsory licensing in ways that go far beyond the TRIPS requirements.

The WTO agreement establishes some exceptions to the exclusive rights on patents and authorises governments to grant compulsory licences for the manufacturing of medicines in the case of a national emergency or other grave circumstances.

Governments of developing countries and civil society groups have asserted that the HIV/AIDS pandemic is a serious emergency that justifies the granting of compulsory licences to ensure the supply of low-cost medications to poor people who are ill.

Correa, however, commented that the FTAA discussions of matters covered by the TRIPS Agreement should not lead to an increase in severity of the existing standards.

The South American countries that belong to Mercosur (Southern Common Market), Argentina, Brazil, Paraguay and Uruguay, are to negotiate under a joint strategy, affirmed the Argentine expert, who participated in Geneva in the consultations between his and the US government on patent legislation in Argentina. –SUNS4869

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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