Comprehensive and Progressive Agreement for Trans-Pacific Partnership May Differ Significantly from TPP

McDonnell Boehnen Hulbert & Berghoff LLP
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In the wake of President Trump's decision to withdraw from the Trans-Pacific Partnership (see "Why President Trump Is Wrong about Trans-Pacific Partnership Agreement"), the other countries involved in negotiations (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) agreed to continue to implement the treaty without U.S. involvement (see "Trans-Pacific Partnership Becoming a Reality").

But while it is likely that the treaty will come into effect among at least some countries, under the name the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP, the parties recently released the results of further negotiations that have in significant ways changed the agreement from what it was before the U.S. withdrew.  For example, Article 5 provides that, "[a]fter the date of entry into force of this Agreement, any State or separate customs territory may accede to this Agreement, subject to such terms and conditions as may be agreed between the Parties and that State or separate customs territory," suggesting that the parties have contemplated other countries, such as China, may be interested in acceding to the treaties terms (and indeed this eventuality may be desired).  And while Article 1 incorporates the terms of the TPP into this agreement, Article 2 provides that certain provisions of the agreement shall be suspended until such time as the signatories agree to end the suspension.

While there are many suspended provisions, certain of them relating to intellectual property of greater or lesser significance.  For example, with regard to Article 18.8: National Treatment:

1.  In respect of all categories of intellectual property covered in this Chapter 3 each Party shall accord to nationals of another Party treatment no less favourable than it accords to its own nationals with regard to the protection4 of intellectual property rights.

2.  With respect to secondary uses of phonograms by means of analog communications and free over-the-air broadcasting, however, a Party may limit the rights of the performers and producers of another Party to the rights its persons are accorded within the jurisdiction of that other Party.

3.  A Party may derogate from paragraph 1 in relation to its judicial and administrative procedures, including requiring a national of another Party to designate an address for service of process in its territory, or to appoint an agent in its territory, provided that such derogation is:
    (a) necessary to secure compliance with laws or regulations that are not inconsistent with this Chapter; and
    (b) not applied in a manner that would constitute a disguised restriction on trade.

4.  Paragraph 1 does not apply to procedures provided in multilateral agreements concluded under the auspices of WIPO relating to the acquisition or maintenance of intellectual property rights.

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3 For greater certainty, with respect to copyrights and related rights that are not covered under Section H (Copyright and Related Rights), nothing in this Agreement limits a Party from taking an otherwise permissible derogation from national treatment with respect to those rights.

4 For the purposes of this paragraph, "protection" shall include matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights as well as matters affecting the use of intellectual property rights specifically covered by this Chapter. Further, for the purposes of this paragraph, "protection" also includes the prohibition on the circumvention of effective technological measures set out in Article 18.68 (TPMs) and the provisions concerning rights management information set out in Article 18.69 (RMI). [For greater certainty, "matters affecting the use of intellectual property rights specifically covered by this Chapter" in respect of works, performances and phonograms, include any form of payment, such as licensing fees, royalties, equitable remuneration, or levies, in respect of uses that fall under the copyright and related rights in this Chapter. The preceding sentence is without prejudice to a Party's interpretation of "matters affecting the use of intellectual property rights" in footnote 3 of the TRIPS Agreement.]

only the last two sentences of Footnote 4 are suspended (denoted by brackets), whereas for Article 18.37: Patentable Subject Matter:

Article 18.37: Patentable Subject Matter

1.  Subject to paragraphs 3 and 4, each Party shall make patents available for any invention, whether a product or process, in all fields of technology, provided that the invention is new, involves an inventive step and is capable of industrial application.30

[2. Subject to paragraphs 3 and 4 and consistent with paragraph 1, each Party confirms that patents are available for inventions claimed as at least one of the following: new uses of a known product, new methods of using a known product, or new processes of using a known product. A Party may limit those new processes to those that do not claim the use of the product as such.]

3.  A Party may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to nature or the environment, provided that such exclusion is not made merely because the exploitation is prohibited by its law. A Party may also exclude from patentability:
    (a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals;
    (b) animals other than microorganisms, and essentially biological processes for the production of plants or animals, other than non-biological and microbiological processes.

4.  A Party may also exclude from patentability plants other than microorganisms. [However, consistent with paragraph 1 and subject to paragraph 3, each Party confirms that patents are available at least for inventions that are derived from plants.]

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30 For the purposes of this Section, a Party may deem the terms "inventive step" and "capable of industrial application" to be synonymous with the terms "non-obvious" and "useful", respectively. In determinations regarding inventive step, or non-obviousness, each Party shall consider whether the claimed invention would have been obvious to a person skilled, or having ordinary skill in the art, having regard to the prior art.

the entirety of Paragraph 2 (relating to new uses of prior art compounds) and the last sentence of Paragraph 4 (relating to inventions derived from plants) are suspended, consistent with concerns in several signatory countries regarding these types of claims.  The entirety of Article 18.46: Patent Term Adjustment for Unreasonable Granting Authority Delays and Article 18.48: Patent Term Adjustment for Unreasonable Curtailment are suspended, thereby removing provisions akin to Patent Term Adjustment/Extension under U.S. law and in particular recognizing the importance of such delays for pharmaceutical products:

[Article 18.46: Patent Term Adjustment for Unreasonable Granting Authority Delays

1.  Each Party shall make best efforts to process patent applications in an efficient and timely manner, with a view to avoiding unreasonable or unnecessary delays.

2.  A Party may provide procedures for a patent applicant to request to expedite the examination of its patent application.

3.  If there are unreasonable delays in a Party's issuance of patents, that Party shall provide the means to, and at the request of the patent owner shall, adjust the term of the patent to compensate for such delays.36

4.  For the purposes of this Article, an unreasonable delay at least shall include a delay in the issuance of a patent of more than five years from the date of filing of the application in the territory of the Party, or three years after a request for examination of the application has been made, whichever is later. A Party may exclude, from the determination of such delays, periods of time that do not occur during the processing37 of, or the examination of, the patent application by the granting authority; periods of time that are not directly attributable38 to the granting authority; as well as periods of time that are attributable to the patent applicant.39]

36 Annex 18-D applies to this paragraph. 

37 For the purposes of this paragraph, a Party may interpret processing to mean initial administrative processing and administrative processing at the time of grant.

38 A Party may treat delays "that are not directly attributable to the granting authority" as delays that are outside the direction or control of the granting authority.

39 Notwithstanding Article 18.10 (Application of Chapter to Existing Subject Matter and Prior Acts), this Article shall apply to all patent applications filed after the date of entry into force of this Agreement for that Party, or the date two years after the signing of this Agreement, whichever is later for that Party.


[Article 18.48: Patent Term Adjustment for Unreasonable Curtailment

1.  Each Party shall make best efforts to process applications for marketing approval of pharmaceutical products in an efficient and timely manner, with a view to avoiding unreasonable or unnecessary delays.

2.  With respect to a pharmaceutical product45 that is subject to a patent, each Party shall make available an adjustment46 of the patent term to compensate the patent owner for unreasonable curtailment of the effective patent term as a result of the marketing approval process.47,48

3.  For greater certainty, in implementing the obligations of this Article, each Party may provide for conditions and limitations, provided that the Party continues to give effect to this Article.

4.  With the objective of avoiding unreasonable curtailment of the effective patent term, a Party may adopt or maintain procedures that expedite the processing of marketing approval applications.]

46 For greater certainty, a Party may alternatively make available a period of additional sui generis protection to compensate for unreasonable curtailment of the effective patent term as a result of the marketing approval process. The sui generis protection shall confer the rights conferred by the patent, subject to any conditions and limitations pursuant to paragraph 3.

47 Notwithstanding Article 18.10 (Application of Chapter to Existing Subject Matter and Prior Acts), this Article shall apply to all applications for marketing approval filed after the date of entry into force of this Article for that Party.

48 Annex 18-D applies to this paragraph.

Similarly, all of Article 18.50: Protection of Undisclosed Test or Other Data and Article 18.52: Biologics are suspended:

Article 18.50: Protection of Undisclosed Test or Other Data50

1.  (a) If a Party requires, as a condition for granting marketing approval for a new pharmaceutical product, the submission of undisclosed test or other data concerning the safety and efficacy of the product,51 that Party shall not permit third persons, without the consent of the person that previously submitted such information, to market the same or a similar52 product on the basis of:
        (i) that information; or
        (ii) the marketing approval granted to the person that submitted such information, for at least five years53 from the date of marketing approval of the new pharmaceutical product in the territory of the Party.
    (b) If a Party permits, as a condition of granting marketing approval for a new pharmaceutical product, the submission of evidence of prior marketing approval of the product in another territory, that Party shall not permit third persons, without the consent of a person that previously submitted such information concerning the safety and efficacy of the product, to market a same or a similar product based on evidence relating to prior marketing approval in the other territory for at least five years from the date of marketing approval of the new pharmaceutical product in the territory of that Party.54

2.  Each Party shall:55
    
(a) apply paragraph 1, mutatis mutandis, for a period of at least three years with respect to new clinical information submitted as required in support of a marketing approval of a previously approved pharmaceutical product covering a new indication, new formulation or new method of administration; or, alternatively,
    (b) apply paragraph 1, mutatis mutandis, for a period of at least five years to new pharmaceutical products that contain a chemical entity that has not been previously approved in that Party.56

3.  Notwithstanding paragraphs 1 and 2 and Article 18.52 (Biologics), a Party may take measures to protect public health in accordance with:
    (a) the Declaration on TRIPS and Public Health;
    (b) any waiver of any provision of the TRIPS Agreement granted by WTO Members in accordance with the WTO Agreement to implement the Declaration on TRIPS and Public Health and that is in force between the Parties; or
    (c) any amendment of the TRIPS Agreement to implement the Declaration on TRIPS and Public Health that enters into force with respect to the Parties.

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50 Annex 18-B and Annex 18-C apply to paragraphs 1 and 2 of this Article.

51 Each Party confirms that the obligations of this Article, and Article 18.52 (Biologics) apply to cases in which the Party requires the submission of undisclosed test or other data concerning: (a) only the safety of the product, (b) only the efficacy of the product or (c) both.

52 For greater certainty, for the purposes of this Section, a pharmaceutical product is "similar" to a previously approved pharmaceutical product if the marketing approval, or, in the alternative, the applicant's request for such approval, of that similar pharmaceutical product is based upon the

undisclosed test or other data concerning the safety and efficacy of the previously approved pharmaceutical product, or the prior approval of that previously approved product.

53 For greater certainty, a Party may limit the period of protection under paragraph 1 to five years, and the period of protection under Article 18.52.1(a) (Biologics) to eight years.

54 Annex 18-D applies to this subparagraph.

55 A Party that provides a period of at least eight years of protection pursuant to paragraph 1 is not required to apply paragraph 2.

56 For the purposes of Article 18.50.2(b) (Protection of Undisclosed Test or Other Data), a Party may choose to protect only the undisclosed test or other data concerning the safety and efficacy relating to the chemical entity that has not been previously approved.

Article 18.52: Biologics59

1.  With regard to protecting new biologics, a Party shall either:
    (a) with respect to the first marketing approval in a Party of a new pharmaceutical product that is or contains a biologic,60,61 provide effective market protection through the implementation of Article 18.50.1 (Protection of Undisclosed Test or Other Data) and Article 18.50.3, mutatis mutandis, for a period of at least eight years from the date of first marketing approval of that product in that Party; or, alternatively,
    (b) with respect to the first marketing approval in a Party of a new pharmaceutical product that is or contains a biologic, provide effective market protection:
        (i) through the implementation of Article 18.50.1 (Protection of Undisclosed Test or Other Data) and Article 18.50.3, mutatismutandis, for a period of at least five years from the date of first marketing approval of that product in that Party,
        (ii) through other measures, and
        (iii) recognising that market circumstances also contribute to effective market protection.

2.  For the purposes of this Section, each Party shall apply this Article to, at a minimum, a product that is, or, alternatively, contains, a protein produced using biotechnology processes, for use in human beings for the prevention, treatment, or cure of a disease or condition.

3.  Recognising that international and domestic regulation of new pharmaceutical products that are or contain a biologic is in a formative stage and that market circumstances may evolve over time, the Parties shall consult after 10 years from the date of entry into force of this Agreement, or as otherwise decided by the Commission, to review the period of exclusivity provided in paragraph 1 and the scope of application provided in paragraph 2, with a view to providing effective incentives for the development of new pharmaceutical products that are or contain a biologic, as well as with a view to facilitating the timely availability of follow-on biosimilars, and to ensuring that the scope of application remains consistent with international developments regarding approval of additional categories of new pharmaceutical products that are or contain a biologic.

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59 Annex 18-B, Annex 18-C and Annex 18-D apply to this Article.

60 Nothing requires a Party to extend the protection of this paragraph to:

(a) any second or subsequent marketing approval of such a pharmaceutical product; or

(b) a pharmaceutical product that is or contains a previously approved biologic.

61 Each Party may provide that an applicant may request approval of a pharmaceutical product that is or contains a biologic under the procedures set forth in Article 18.50.1(a) and Article 18.50.1(b) (Protection of Undisclosed Test or Other Data) within five years of the date of entry into force of this Agreement for that Party, provided that other pharmaceutical products in the same class of products have been approved by that Party under the procedures set forth in Article 18.50.1(a) and Article 18.50.1(b) before the date of entry into force of this Agreement for that Party.

Suspension of these provisions removes many of the benefits for biotechnological and pharmaceutical inventions that were part of, and part of the attractiveness of, the TPP as negotiated by the Obama administration.  While in many ways far less (and in others, for our technological and global age far more) significant than America's withdrawal from the League of Nations after World War I, these alterations of the TPP are the consequence of an abdication of American leadership on intellectual property rights that (despite occasional anomalous decisions by the Supreme Court) have been a consistent part of U.S. innovation policy for over a generation (and arguably throughout our history).  Regardless of the current inclination of the present administration to espouse nationalistic rhetoric and policies, U.S. biotechnology and pharmaceutical companies live in the global community and their ability to compete in foreign markets has not been improved by suspension of these provisions of the CPTPP.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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