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Friday, February 6, 2015

Does TPP spell the end of the world as we know it?

By David Stewart, Associate

Over the course of the last 12 months or so, the long-mooted Trans Pacific Partnership Agreement (TPP) has periodically occupied the pages of the major Australian media outlets, with articles covering all sorts of issues, from concerns about the impact on public healthcare, to the serious lack of public transparency regarding negotiations between the parties and, finally, the apparently more serious (if that can be measured by the number of articles written) impact on Australians' "fundamental human right" to (illegally) download the latest episodes of Game of Thrones, House of Cards and/or [insert your favourite TV show here].

So what is the TPP, and why might it stop you 29% of Australians aged 18 to 64 from downloading their favourite TV shows and movies? Well, since the TPP provides so much juicy material for IP lawyers, we're going to cover these questions, and others, in two parts. In the remainder of this post, we'll discuss the background to the TPP, and some key developments in the patents space. You'll have to wait for a second post, to be released shortly, to find out whether it’s the end of the (illegal downloading) world as we know it, and, to paraphrase R.E.M., whether you'll feel fine*.

What is the TPP?
The TPP is a proposed multi-lateral trade agreement currently involving 12 Pacific Rim countries including Australia, Canada, Japan, Singapore and the US. If signed, it will be the largest ever economic treaty – with its parties jointly representing more than 40% of the world’s GDP and 25% of its trade.

The final text of the TPP is expected to cover a huge range of topics that will affect the Australian economy, including agriculture, foreign investment, financial services, government procurement, e-commerce, competition policy and intellectual property. As such, we can expect that this treaty, if it is finalised and comes into force in Australia, will have some wide-ranging impacts on Australian society.

The full impact of the TPP on Australia is a little hard to determine at this stage because the negotiations have been shrouded in a cloak of secrecy so dark that Harry Potter's invisibility cloak looks…well…visible. As such, the majority of the text has not yet seen the light of day. However, the kind folks over at Wikileaks have managed to periodically obtain and release draft chapters of the TPP text (each release generally coinciding with the aforementioned media frenzy), including three versions of the draft IP chapter – the first in 2011, a second draft in November 2013 and a further draft in October last year.

The most recent round of talks on the TPP text were held in New York last week, and some reports out of the US are suggesting that the TPP text may be finalised as soon as mid-March.

The most recently leaked draft of the IP chapter shows the status of negotiations as at May 2014, and so we can expect that there have been some further developments since then. Nevertheless, a comparison of the changes between the November 2013 and May 2014 drafts shows some interesting developments during that period, particularly in the copyright and patents sections, and some persisting areas of disagreement between the negotiating parties.

Key patents proposals

The November 2013 draft IP chapter contained a number of controversial (generally US-proposed) provisions relating to patents, with many commentators expressing concern as to their effect on the cost of public healthcare. The October 2014 draft shows that some of these proposals have been dropped (presumably due to pressure from other negotiating parties). However, others have survived. Below is a summary of the situation following release of the latest draft.
  • Patent protection to be available for methods of medical treatment. This provision appeared in the November 2013 draft. The grant of patent rights would still be subject to the basic requirements of patentability being satisfied, such as novelty and inventive step. This is not a controversial proposal from our perspective as it reflects existing Australian law. In any event, the controversy may be more a matter of form over substance. The proposal accords with the recent resolution of the leading international IP organisation AIPPI (the International Association for the Protection of Intellectual Property) that patent protection should be available for methods of medical treatment regardless of the specific format of the claim. However, of the countries negotiating the TPP, only the US and Australia presently allow patents for methods of medical treatment per se. In other countries, methods of medical treatment are either ineligible for patent protection, or complex claim drafting has evolved to address issues of patent eligibility. This provision has been dropped from the May 2014 draft, meaning that negotiating countries will be free to exclude methods of medical treatment from patentability.
  • Patent protection to be available despite a lack of evidence of enhanced efficacy. This provision appeared in the November 2013 draft, and survives in the May 2014 draft. The grant of rights would still be subject to the other requirements of patentability being satisfied. This provision appears to be directed at provisions similar to those under the Indian patent law, the application of which saw the Indian Supreme Court hold in April 2013 that a patent application by Novartis for a beta crystal form of imatinib mesylate (used in a cancer treatment) was not patentable because Novartis had not established that the form claimed in the patent resulted in an enhanced or superior efficacy compared to the other known forms of the compound.
  • The term of a patent to be extended if there is a delay in the issue of the patent. This provision appeared in the November 2013 draft, and survives in the May 2014 draft. An extension would be granted if more than four years has elapsed from the date of filing of the application, or two years after a request for examination of the application has been made, whichever is later. This would apply to all patents, not just pharmaceutical patents. Under existing Australian law, the term of a pharmaceutical patent may be extended for up to five years to account for delays in obtaining regulatory approval for the product covered by the patent. Importantly, the TPP provision is technology neutral and therefore has broader reach. Note that a similar technology-neutral provision exists in the existing Australia-United States Free Trade Agreement, although it is yet to be enacted into Australian law.
  • Restrictions on use of safety and efficacy information for pharmaceutical products by third parties. The November 2013 draft included a provision which would require that information submitted in support of regulatory approval of a new pharmaceutical product could not be used by a generic company to ‘bridge’ its own application if that application is made within five years of the innovator company’s application. This is consistent with existing Australian law. However, the November 2013 text went beyond existing Australian law by requiring that information submitted in support of regulatory approval of a pharmaceutical product that contains a previously approved chemical substance would be protected for three years from the date of marketing approval of the new product. Australian law presently does not allow any period of data exclusivity in such circumstances. However, this proposal appears to have been limited in the May 2014 draft so it now only applies, in a modified form, to agricultural chemical products.
  • A US-style ‘orange book’ system to maintain records of approved pharmaceutical products. The November 2013 draft contained a proposal that would require the regulatory authority in each country to maintain a database that (i) identifies the patents covering an approved pharmaceutical product or its approved method of use; and (ii) provides for notice to be given to the patentee if another person seeks to market a product that is the same as, or similar to, the approved pharmaceutical product. Somewhat surprisingly (given its apparent utility), this proposal has been dropped from the latest draft. AIPPI Australia recommended such a system in its submissions to the Pharmaceutical Patent Review in 2013.
It would appear from the May 2014 draft that the US has made some significant concessions in relation to the patents section of the TPP. Indeed, the changes that would be introduced into Australian patent law if that draft of the TPP were to come into force are likely to be much less significant in relation to the above issues than the media frenzy would suggest. As a result, so too may be the implications for the cost of public healthcare, at least in Australia. Whether this remains the case when (or probably more accurately, if) the TPP is finalised, is anybody's guess.

Stay tuned for the next copyright update to find out whether the TPP sound the death-knell for illegal downloading, and other key developments in relation to copyright.

* With apologies to R.E.M. who have no doubt been the victims of illegal downloading.

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