Intellectual Property in the TPP: How About a Little Balance?

This past Friday (August 17), Douglas E. Schoen published an op-ed in Politico lobbying for “strong” intellectual property (IP) protection in the Trans-Pacific Partnership Agreement (TPP). The op-ed argued that such an approach would be a “straightforward” route to “job-creating innovation.” The op-ed ignored serious costs that over aggressive IP protection can pose to the economy, including the stifling of innovation in consumer electronics products and high monopolist prices for consumer goods including critical medicines. Like others before and since, the study Schoen cites does not support inferences linking particular IP demands in the TPP to innovation or jobs.

Many recent cases have shown that intellectual property practices and rules can stifle innovation and limit needed competition: abusive copyright claims intended to prevent introduction of new and innovative products and services; overbroad patents that hold back research and invention; trademark claims designed to stifle competition rather than prevent consumer confusion about the origin of goods and services. While protecting trademarks, copyrights, and patents can be useful, so is placing smart limits on exclusivity.

The importance of limits to IP

Inadequate balance in copyright law would prevent the creation and distribution of new creative works, like news reports and documentary films that use existing films, music, and photographs. For example, when filmmakers Marilyn Agrelo and Amy Sewell were filming a documentary about New York City kids in a ballroom dancing competition, a cell phone with the Rocky theme song rang in the background.  The label that owned the song, EMI, demanded $10,000 in license fees. Most documentary filmmaking would grind to a halt with such demands. Fortunately, fair use provides the safety value that allows films like this to see the light of day.

Similarly, many industry sectors, like consumer electronics and information technology – which add significant value to the economy – would be unable to function without limits to copyright protection. These industries make products that let people use content in convenient ways. For instance, MP3 players let people transfer songs they have already bought from their computer to these devices.  The making and marketing of these products would have been jeopardized without the protections provided by fair use. Such limits are an essential part of US law but are extremely weak in the TPP.

Meanwhile, bad patent policy not only limits access to medicines, it can also stymie medical innovation rather than advance it. Today, pharmaceutical monopolies price lifesaving medicines out of reach of people who need them in developing countries, resulting in preventable suffering and death. The same monopolies cost American consumers and healthcare dearly. While some dismiss harmful monopoly abuses as the price of patent-based medical innovation, the world’s largest funder of biomedical research is actually the taxpayer-funded National Institutes of Health (NIH).  For example, the HIV/AIDS medicine ritonavir was invented on an NIH grant to Abbott Laboratories. Abbott monopolized it, tied it to a second product, and used its patents and market power to discourage the development of competing combination products that might have offered superior treatment options.  Years later, Abbott’s ritonavir patents and failure to license still raise costs and constrain HIV treatment options around the world.

Schoen argues for providing twelve years data exclusivity in the TPP to makers of biotech medicines, which would lead to monopolies that are at least twelve years long. This would be cruel to people suffering from treatable conditions, and would lock American consumers in to a bad law at home. The twelve-year monopoly period only recently adopted in U.S. law is very controversial.  The Federal Trade Commission found no need for it. Congress could reduce the period of years (the White House supports seven rather than twelve), save Americans money and help make medicines affordable. But if the U.S. Trade Representative forces a twelve-year period in to the TPP, Americans could lose the freedom to change our own law.

So far as we are aware, no specific evidence has been forwarded to support the claim that the U. S. Trade Representative’s aggressive patent demands in the TPP will advance the medical innovations we need. But it is clear they would lead to more government-granted pharmaceutical monopolies in the Asia-Pacific region, even for minor variations on old medicines that fail to enhance efficacy. A better approach would focus on improving patent quality and safeguards against patent abuse, to ensure that patents reward meaningful contributions.

Sidelining the importance of these limits to IP protection, Schoen argues that the TPP should be shaped with “U.S. interests in mind,” as though the interests of IP owners are equal to U.S. interests. This ignores the interests of the American public as well as the interests of many sectors of the U.S. economy which depend on limits to IP.

 

The NDP Consulting study Schoen cites “uses industrial research and development expenditures as a measure of the intensity of IP,” a risky conflation. The study’s methodology does not permit making inferences about industry reliance on particular IP rules, And Schoen fails to make any specific connection between jobs or exports and the particular IP schemes sought in the TPP. The industries listed in the NDP study each operate today under the existing levels of U.S. and foreign IP protection. All of the TPP negotiating countries are already parties to the World Trade Organization agreement on intellectual property, including its rules against trademark counterfeiting and copyright piracy.

According to the U.S. Constitution, the primary purpose of copyrights and patents is “[t]o promote the progress of science and useful arts” (Article I Section 8(8)). This purpose is achieved both by providing some exclusive rights and also by providing limits to those rights. Expanding the scope of exclusive rights as far as possible works against that purpose by stifling innovation and harming consumer interests. The emerging high-tech economy depends in no small part on balance, open platforms and cross-fertilization. The TPP will bind member economies for many years to come, and its provisions must reflect this balance.

This post was co-written by Rashmi Rangnath of Public Knowledge and Peter Maybarduk of Public Citizen and was originally published on the PK policy blog. 

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