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

August 24, 2012 ,

This blog post was co-written by Peter Maybarduk, Public Citizen’s Global Access to Medicines Program Director.

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

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.