The Trans-Pacific Partnership and intellectual property – an opportunity lost?

It is a surprise to many that the Trans-Pacific Partnership (TPP) contains extensive provisions on intellectual property rights. Those provisions, which were driven largely by the United States, advance U.S. intellectual property interests in ways that have not been seen in any previous multiparty trade agreement.

When Donald Trump, in one of his first acts as president, issued a memorandum directing the office of the United States Trade Representative to withdraw from the TPP, he fulfilled a campaign promise but he also sacrificed the potential benefits that the provisions on intellectual property would have had for U.S. trade. Whether those benefits can be incorporated into bilateral trade agreements, the path that Trump has chosen to follow, is yet to be seen.

What is clear, however, is that the U.S. has lost the opportunity to strengthen intellectual property rights through the TPP, which may prove to be one of the unintended consequences of U.S. withdrawal.

The TPP, signed by the U.S. and 11 other Asia-Pacific countries with almost 800 million people and 40 percent of the world's GDP, is the largest regional trade agreement ever negotiated. Because the TPP requires U.S. ratification, Trump's decision to withdraw effectively kills the agreement as it is currently written.

The TPP devotes approximately 75 pages to intellectual property. Some of the provisions reaffirm already-established rights and obligations; others carve new ground in ways that solidly further U.S. intellectual property objectives and priorities.

In 2015, legislation granted Congress Trade Promotion Authority and provided that a principal U.S. trade negotiating objective is "to further promote adequate and effective protection of intellectual property rights," including ensuring that intellectual property trade agreements "reflect a standard of protection similar to that found in United States law," and "that standards of protection and enforcement keep pace with technological developments." The TPP's intellectual property provisions arguably succeed on both counts.

The TPP's patent provisions strengthen standards of protection in ways not found in other multiparty agreements. For example, they require countries to follow the U.S. example in ensuring that new, inventive uses of known products qualify for patent protection and in extending the duration of granted patents when there are unreasonable delays in processing applications or to compensate for lengthy regulatory approval processes that prevent inventions from being marketed. Moreover, as has long been sought by the U.S., the TPP requires member countries to adopt a U.S.-style "grace period," which gives patent applicants a 12-month window to file a patent application in the event that applicants prematurely disclose their inventions.

With respect to trademarks, the TPP strengthens and broadens protection for brand owners by requiring countries to protect marks consisting of sounds and colors, and to make to make best efforts to protect trademarks consisting of distinctive scents, instead of limiting protection only to marks that are visually perceptible. At the same time, the TPP limits marking and serves to preserve protection for the use of common food names in the interest of U.S. food growers and manufacturers.

Trade secret protection under the TPP is uniquely strong. The TPP protects against unauthorized disclosures of trade secrets not only to private entities but also by or to state-owned enterprises. In addition, although the TPP allows for exceptions, it is the first multiparty agreement to require criminal sanctions for trade secret and cyber theft.

But perhaps the TPP's most far-reaching intellectual property provisions deal with the protection of undisclosed test data submitted for marketing (i.e., regulatory) approval of new pharmaceutical, agrochemical or biologic products. What is more, the TPP is the first U.S. trade agreement to expressly include protection for biologic medicines. For new pharmaceuticals, the TPP requires member countries to provide at least five years of protection from the date on which marketing approval was granted. For agrochemicals, the duration of protection is 10 years, and for biologics — although the U.S. pressed for a longer period of protection — it is at least either eight years of protection or five if countries provide "other measures … to deliver a comparable outcome in the market."

The United States Trade Representative will no doubt want to include TPP-like intellectual property provisions in the bilateral trade deals that Trump has declared he would prefer. Even if bilateral negotiations result in positive outcomes, it is unlikely that new agreements will emerge quickly given that trade negotiation is a lengthy process. U.S. withdrawal from the TPP may thus create a vacuum to be filled by other multiparty trade negotiations that do not include the U.S.

One such possibility is the Regional Comprehensive Economic Partnership (RCEP), a trade agreement being negotiated among the 10 countries of the Association of Southeast Asian Nations, plus Australia, China, India, Japan, New Zealand, and South Korea.

If the negotiations succeed, analysts do not think that the RCEP will include intellectual property provisions as strong as those in the TPP. But because of the primacy of place that the RCEP may assume, the RCEP's provisions risk becoming the standard for the Asia-Pacific region, and the U.S. may end up questioning the decision to walk away from the TPP.

Jay Erstling, an attorney with the Patterson Thuente IP, advises businesses on protecting their intellectual property in global markets. Contact Jay at erstling@ptslaw.com.