INTELLECTUAL PROPERTY RIGHTS IN BILATERAL AND

REGIONAL TRADE AGREEMENTS

TRADE, INVESTMENT AND INNOVATION DIVISION

Teemu Alexander PuutioLuca Parisotto

11 March 2016

Observations: the Role of the Multilateral

FrameworkPart 1Part 2Part 3Part 4

TRIPS contains not only minimum standards, but also flexibilities and limits to IP protection (ceilings). Art.7 & 8 TRIPS express this balance and guide TRIPS interpretation

Bilateral and regional treaties amongst WTO Members addressing IP are inter-se modifications of the WTO/TRIPS framework

As such, they may not derogate from TRIPS rules which are crucial for giving effect to the object & purpose of TRIPS. Thus, flexibilities crucial for the balance which Article 7 establishes should not be restricted.

3

Observations: the Role of the Multilateral Framework

TRIPS Article 7 & 8

Article 7Objectives

The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare , and to a balance of rights and obligations.

Article 8Principles

1. Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement

2. Appropriate measures, provided that they are consistent with the provisions of this Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology

4

IPRs in FTAs Index 2016

OverviewPart 1Part 2Part 3Part 4

The IPRs in FTAs Index• Caveat! This is not a review of the country’s IPR

laws– We therefore cannot say the extent an agreement may

surpass TRIPS or any existing domestic laws• Calculated for the 80 agreements that include IPR

provisions– Scaled to range from 0 to 100

• Based on tallying points for the presence of provisions concerning:– Cooperation– Reaffirming international obligations– WTO coverage– Commitments to technology transfer and access to technology– Competition and consumer protection– Coverage of the different types of IPR (1-3 scale)– Enforcement

6

Proliferation of IPR Inclusive Agreements

Introduced by advanced economies

Top Asia-Pacific Countries Number of IPR inclusive Agreements

Turkey 21Singapore 15Japan 12Korea, Rep.of 9Malaysia 8New Zealand 7Australia 6China 6Thailand 6Brunei Darussalam 5Taiwan, POC 5India 4Indonesia 4Lao PDR 4Philippines 4Viet Nam 4Cambodia 3Hong Kong, China 3Kazakhstan 3Myanmar 3

Top Partners Number of IPR inclusive Agreements

Chile 7EFTA 4Peru 4United States 4EU 2Total 78

Highest and Lowest rated agreements

Distribution of Index scores

ASEAN-CHIN

A

INDIA-SI

NGAPORE

PANAMA-SINGAPORE

TURKEY

-CROATIA

TURKEY

-ISRAEL

CHINA-PAKIST

AN

UKRAINE-R

USSIAN FE

DERATIO

N

UKRAINE-T

URKMENIST

ANEA

EC

TAIW

AN-EL SA

LVADOR-H

ONDURAS

PERU-SI

NGAPORE

SINGAPORE-J

ORDAN

TURKEY

-MAURITI

US

CHILE - H

ONG KONG, CHIN

AEC

OTA

KOREA-INDIA

TURKEY

-PALEST

INE

TURKEY

-SYRIA

SINGAPORE-TAIW

AN

TURKEY

-EGYP

T

RUSSIAN FE

DERATIO

N-KAZAKHST

AN-BELARUS

GEORGIA-TU

RKEY

MALAYS

IA-PAKISTAN

NEW ZE

ALAND-M

ALAYS

IA

NEW ZE

ALAND-TH

AILAND

JAPAN-SI

NGAPORE

CHINA-PER

U

TRANS-P

ACIFIC SEPA

KOREA-CHILE

NEW ZE

ALAND-H

ONG KONG,China

KOREA-SI

NGAPORE

JAPAN-CHILE

TURKEY

-EFTA

JAPAN-PHILI

PPINES

COSTA RICA-CHIN

A

ASEAN-AUST

RALIA-NEW

ZEALA

ND

JAPAN-PER

U

US-LAO

JAPAN-IN

DONESIA

JAPAN-TH

AILAND

EU-KOREA

KOREA-U

S

AUSTRALIA-CHILE TP

P0

10

20

30

40

50

60

70

Agreement reaffirms TRIPS Agreement does not reaffirm TRIPS

10

More innovative countries sign more comprehensive agreements

0 10 20 30 40 5017

22

27

32

37

42

47

52

57

62

67Switzerland

United States of America

Australia

Nicaragua

EU

Costa Rica

Japan

EFTA

Korea, Rep.

Chile

China

Hong Kong (China)New Zealand

Malaysia

PanamaThailand

IndonesiaPeru

MontenegroViet Nam

GuatemalaPhilippines

Singapore

Brunei DarussalamGeorgia

Myanmar

Cambodia

Turkey

IndiaMexico

Albania

Pakistan

Morocco

Moldova, Rep.

Azerbaijan

SerbiaBelarus

Iran, Islamic Rep.

Kazakhstan

Russian Federation

Tunisia

Jordan

Romania

Mauritius

Uzbekistan

Kyrgyzstan

Tajikistan

Ukraine

Croatia

Israel

f(x) = 0.604368014073393 x + 31.5388876056026R² = 0.350022550855372

Correlation between mean IPR index and Global Innovation Index by country

Mean IPR Index

Glob

al In

nova

tion

Inde

x (2

014)

11

A reflection of domestic policy?

0 5 10 15 20 25 30 35 40 45 502

2.5

3

3.5

4

4.5

5

Switzerland

United States of America

Australia

Nicaragua

EU

Costa Rica

Japan

EFTA

Korea, Rep.

Taiwan, POC

Chile

China

Hong Kong (China)

New ZealandMalaysia

PanamaThailand

Indonesia

PeruViet Nam

Guatemala

Philippines

Singapore

TurkeyIndiaMexico

Egypt

Pakistan

Morocco

Syria

Iran, Islamic Rep.

Russian Federation

Jordan

Mauritius

Romania

Tunisia

UkraineIsrael

f(x) = 0.0289868524167269 x + 3.20703905243445R² = 0.239660049083915

Correlation between mean IPR index and Ginarte-Park IPR pro-tection index

Mean IPR Index

Gina

rte

Park

IPR

Inde

x (2

010)

12

Medicines and Medical Devices Committee.

Top participants and partners

Top Asia-Pacific Countries Number of IPR inclusive Agreements

Mean Overall Index

Minimum Overall Index

Maximum Overall Index

Standard deviation Overall Index

Turkey 21 7.79 1.85 24.24 6.82Singapore 15 10.72 1.85 35.45 10.66Japan 12 23.09 1.85 53.97 13.84Korea, Rep.of 9 19.47 1.86 44.79 14.53Malaysia 8 14.47 1.85 37.36 13.40New Zealand 7 14.68 1.85 26.18 7.43Australia 6 33.58 14.85 61.48 18.53China 6 17.58 1.85 43.03 14.27Thailand 6 13.88 1.85 37.34 13.77Brunei Darussalam 5 9.64 1.85 26.18 9.86Taiwan, POC 5 19.16 7.41 31.85 11.71India 4 7.45 1.85 14.94 6.75Indonesia 4 13.07 1.85 33.62 15.58Lao PDR 4 11.96 1.85 28.07 13.86

Top Partners Number of IPR inclusive Agreements

Mean Overall Index

Minimum Overall Index

Maximum Overall Index

Standard deviation Overall Index

Chile 7 18.64 3.73 46.66 13.63EFTA 4 22.00 18.70 26.22 3.21Peru 4 13.05 1.89 27.98 11.30United States 4 42.45 28.07 61.48 14.42EU 2 31.73 24.24 39.22 10.59Switzerland 2 48.50071 43.02849 53.97293 7.738893Total 78 12.97 1.85 61.48 13.18

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Agreements involving developed countries are more comprehensive

Developing countries Developed countries Developing and developed countries0

5

10

15

20

25

30

35

40

45

50

Distribution of IPR Index by agreement member’s status

Inde

x va

lue

Min

Mean

Mean + Std. Dev.

Mean – Std. Dev.

Australia - U.S. TPP

China - Chile

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Ratcheting up?

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

No. Agr. 0 0 1 0 1 0 1 2 1 0 1 1 1 4 4 10 10 5 9 4 8 8 3 3 3 1

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

10

20

30

40

50

60

70

Mean, Minimum, and Maximum IPR Index per year

IPR

Inde

x va

lue

Max

Min

Mean

15

Or business as usual?

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015No. Developing

Agr. 0 0 0 0 0 0 0 1 1 0 1 0 0 2 1 2 4 2 4 0 4 3 0 0 0 0No. Developed

Agr. 0 0 0 0 0 0 0 0 0 0 0 1 1 2 0 3 2 0 0 1 0 2 2 0 0 0No. Developed and Developing

Agr. 0 0 1 0 1 0 1 1 0 0 0 0 0 0 3 5 4 3 5 3 4 3 1 3 3 1

1 9 9 0 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5

0

10

20

30

40

50

60

70

Mean IPR index per year and member statusYearly Mean Index (Developing countries) Yearly Mean Index (Developed countries)Yearly Mean Index (Developed and Developing countries)

IPR

Inde

x va

lue

16

A means to complement multilateral agreements

IPRs in FTAs Index 2016

Focusing on patentsPart 1Part 2Part 3Part 4

Patent Index• Constructed in a similar manner as

the IPR index• Covers:

• Specific pharmaceutical provisions

• Compulsory licensing• Exceptions to patent rights• Patentability criteria• Test data exemption• Patent linkage

• Term extensions• Patenting period• Security exemptions• Parallel importing• Border measures• Novelty grace period

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Example of provisions related to patents

• Score of 1: New Zealand – China

• Score of 2: Japan – Philippines

20

Examples of provisions related to patents

• Score of 3: EU – Korea, Rep.

21

Patent index also rising

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

10

20

30

40

50

60

Mean Patent index per year

Mea

n Pa

tent

Inde

x

22

More comprehensive agreements cover patents more comprehensively

0 10 20 30 40 50 60 700

20

40

60

80

100

120

AUSTRALIA-US

TPP

JAPAN-SWITZERLAND

AUSTRALIA-CHILE

TRIPS

KOREA-US

CHINA-SWITZERLAND

EU-KOREA

MALAYSIA-AUSTRALIA

JAPAN-THAILAND

US-SINGAPORE

JAPAN-INDONESIA

NICARAGUA-TAIWAN,POC

US-LAO

JAPAN-VIET NAM

JAPAN-PERU

EFTA-HONG KONG, China

ASEAN-AUSTRALIA-NEW ZEALANDCOSTA RICA-CHINA

JAPAN-MALAYSIA

TURKEY-EUTURKEY-EFTA

EFTA-SINGAPORE

JAPAN-CHILE

KOREA-SINGAPORE

EFTA-KOREA

KOREA-CHILE

NEW ZEALAND-CHINA

TRANS-PACIFIC SEPA

JAPAN-INDIA

JAPAN-SINGAPORE

NEW ZEALAND-MALAYSIA

CHILE - HONG KONG, CHINAASEAN-KOREA

Correlation between IPR index and Patent index

IPR Index

Pate

nt In

dex

23

Patent specific clauses

Medicines and Medical Devices Committee.

Health-Relevant Provisions?

25

Example of compulsory licensing

• In the Investment Chapter of Australia – US Agreement

• Most agreements follow exactly this structure

26

Example of Test data exemption• From Japan –

Switzerland agreement

27

Example of novelty grace period• Australia –

Malaysia

28

Example of term extension• US – Lao PDR

29

Example of Pharma.-specific provisions

• Korea – US• These provisions are only

present in developed – developed agreements

• Reimbursement by market means (FRAND), transparency of government regulation, marketing, ethical business practices, Medicines and Medical Devices Committee.

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Setting the stage for discussions

Part 1Part 2Part 3Part 4

Observations and Problems associated with FTA IP Provisions

IP as a Trade-off: 1. concessions driven by export interest do not always

lead to a mutually beneficial regulation of IP2. Trade preferences obtained may be eroded as soon as

similar or better preferences are granted to other countries

Increasing Comprehensiveness erodes Policy Space:3. IP rules become increasingly comprehensive and

prescriptive, transplanting detailed rules from the IP-demanding country

4. As treaty obligations, these rules are almost cast in stone – with little options to adapt to changing domestic needs

Lack of Transparency, Inclusiveness & Equal Participation:

These deficits cannot be corrected in implementation processes if detailed rules leave no flexibility for a tailored implementation

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RecommendationsNegotiation Mandate & Process:

1. Countries facing IP demands should adopt a proactive agenda on IP, based on input from all stakeholders.

2. No country should demand or agree to IP provisions which have not been subject to a public negotiation process where all stakeholders have an opportunity for review and comment.

The negotiated Outcome:3. TRIPS-plus rules should still allow for policy space,

respect core TRIPS flexibilities and all other int. rules applicable between the parties.

4. Agreements should contain review clauses to asses the impact of IP rules and an option for renegotiating IP provisions in light of an impact assessment.

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Interpretation and Implementation:1. All other applicable int. law forms the interpretative context.

2. Interpretation should be in light of TRIPS balancing objectives. TRIPS-plus rules should be constructed to allow for sufficient policy space to implement this balance. When implementing them, states have the right to draft appropriate exceptions and limitations (E&Ls)

3. The notion of IP protection and enforcement encompasses also E&Ls and other balancing rules. This allows for a wider understanding of MFN: Countries facing IP demands should claim concessions regarding E&Ls secured by other (similar) countries.

4. IP-demanding countries should not use unilateral assessments of compliance; nor should they unilaterally withdraw benefits.

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Recommendations