Quick Reaction to the EU/India FTA (BTiA) Negotiating Text

On 28 March 2013, the EU-India FTA (BTiA) negotiating text was made available here. Below are some of my quick impressions on some portions of the negotiating text.

As the EU-India FTA and the Trans-Pacific Partnership Agreement (TPPA) have both been negotiated around the same time period and both will likely impact access to knowledge and access to medicines issues for developing countries, civil society has been highly critical of potential overreach in the intellectual property chapters and has scrutinized these agreements. Based on what has already been agreed to, or even what is outstanding with regard to EU brackets and proposals, the EU-India FTA reflects a much less aggressive approach than the US proposal for the TPPA. The EU-India FTA include several provisions that take care to preserve flexibilities that exist under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) that the US proposal in the TPPA fails to do. While neither the EU or India are party to the TPPA negotiations, the current EU-India FTA negotiating text could serve as an important signal that developing countries are unwilling to accept many TRIPS-plus measures (and, of course, should not be willing to do so). Access to medicines and access to knowledge are highly important goals and countries negotiating free trade agreements must be careful to guard these concerns.

Article 7.6, which has been proposed by the EU, is concerning because it puts a limit on a downstream purchaser’s resale rights. It seems to give the author of an original work of art a perpetual right to receive a royalty for the resale of the piece of art. This right cannot even be waived or transfered by the author of the work, resulting in a situation where each time one who has purchased the work wants to re-sell it, he will then owe a royalty to its author. While the article provides that the amount shall be determined by national legislation, it is further concerning that the royalty does not seem to be limited (i.e., to a reasonable royalty). Nor does this provision cease to apply after a certain number of resales, but the right will continue for the remainder of the author’s life (it likely does not apply during the 50 year period of protection after the author dies as the proposal uses the word “author” rather than “rightholder”).

Article 7.9(1), which does not appear to have brackets, covers limitations and exceptions for copyright. The language states that limitations and exceptions may be created “only” in compliance with the three-step language test (1) certain special cases, 2) which do not conflict with a normal exploitation of the subject matter and 3) do not unreasonably prejudice the legitimate interests of the right holders), but the text does note that it is applied “in accordance with” other conventions and international treaties. This addition may be interpreted to preserve the Berne exceptions. However, the language is still potentially problematic because any international treaties or conventions the parties later decide to join must be similarly careful to preserve these exceptions. In my opinion, explicit language to the effect that the three-step test is “without prejudice to the rights contained in the Berne Convention” would have been better because the three-step test appears to be a constant source of contention in international agreements involving copyright.

Article 7.9(2) explicitly excludes temporary copies from copyright protection, a far superior result to the US proposal which proposed in the TPPA explicit protection for such copies. Allowing temporary copies and excluding such copies from copyright protection is essential for technology to function in the digital era.

Article 13(1), which has been agreed to, explicitly “recognize[s] the importance of the Doha Declaration.” It is positive to see an explicit reference to the Doha Declaration, and done so in a straightforward manner (as opposed to the US proposal for the TPPA which repeats and combines certain portions of the Doha Declaration while leaving out others and raises concerns about potential limiting effects, such as restricting the application of the Doha Declaration to a limited number of diseases). Stronger language could have been used to the effect that parties “affirm their obligations under the Doha Declaration,” but it is still a welcome recognition of the importance of the declaration. Moreover, the second half of Article 13(2) explicitly states that “Nothing in this Agreement shall be construed as to impair the capacity of the Parties to promote access to medicines and protect public health,” a recognition of the importance of public health. Again, stronger language could have been used, for example to say “access to medicines for all.” Article 13(2), however, appears to place pressure on parties to adopt and implement the complicated Paragraph 6 solution and August 30 decision.

Article 14 essentially replicates TRIPS requirements on data protection. This result is a win for India, I think, as it is careful to preserve the key flexibilities contained in the TRIPS Agreement. The Article starts with text stating “When a Party requires,” rather than requiring protection in all cases. Furthermore, the clear language of this article only requires protection and not exclusivity. The text preserves the TRIPS flexibility that such protection be provided only against unfair commercial use, rather than for any use. It also preserves the safeguards such as applying where the origination of the data required “considerable effort,” rather than all data. This text, which has been agreed to by the parties, stands in stark contrast to what the US has proposed in the TPPA. The US would not only require exclusivity, rather than simply protection, but also eliminates the aforementioned safeguards. The agreed text in the EU-India FTA leaves the policy space open to determine the best methods for implementation and avoids the problems of exclusivity, which include ethical concerns.

Article 15(5) proposed by the EU provides for measures to avoid duplicative testing in vertebrate animals and Article 15(6) provides for a cost-sharing model. The EU has frequently proposed or provided for such cost-sharing models in other FTAs with respect to plant protection/agriculture. These cost-sharing models to avoid duplicative testing in vertebrate animals have also appeared in EFTA free trade agreements.

Article 21, regarding the right to information is better than the US proposal in the TPPA. The point of debate between the EU and US appears to be largely over whether Parties “may” grant judicial authorities the power or “shall” grant. Regardless of this point, the language includes safeguards that exist under TRIPS, for example the right to information may not exist where it “would be out proportion to the seriousness of the infringement.” Unlike the US proposal for the TPPA, the proposal in the EU-India FTA is also limited to the identity of the third party and is not as expansive. By contrast, the US proposal would permit greater information be revealed, which is not limited to identity of the party, and would also apply to “any aspect of infringement” rather than only applying to third parties involved in “production and distribution” of infringing goods.

Articles 20 and 22 cover provisional measures. With respect to Article 22, both India and the EU have their own proposals. The EU proposals are much less aggressive than the US proposal for the TPPA. The EU uses language such as “may” and “appropriate circumstances,” in contrast to the US proposal that would require judicial authorities to act (“shall act on requests for provisional measures”) and would require action within a very short window of time. However, the EU proposal leaves out an important TRIPS safeguard, such as the showing that provisional measures are warranted due to a showing of “irreparable harm.”

Article 26 on damages has been agreed to. The language here provides for damages in an amount “adequate to compensate for the injury to the right holder.” This is an appropriate level of damages, designed to make the injured party whole rather than setting the damages at a punitive level. The language sharply contrasts to the US proposal for the TPPA which has proposed excessive calculations for damages, including required consideration of the suggested retail price or any measure of legitimate value proposed by the right holder.

Article 27 has also been agreed to and covers legal costs. Here, the authorities have authority to order court costs and attorney’s fees, but also provides that “in appropriate cases, Parties may authorize the judicial authorities to order recovery of profits and/or payment of pre-established damages.” On the positive side, this language is permissive (“may authorize the judicial authorities” rather than granting judicial authorities this power), but pre-established damages carry the concern that they are often set at a punitive level. The language regarding the amount of statutory damages is better than what has been proposed by the US in the TPPA, however, because it does not state that pre-established damages must be set at as a deterrent level penalty. Unfortunately, the agreed to language notes that recovery of profits and/or payment of pre-established damages may be assessed even for innocent infringements.

Article 29 provides for presumption of ownership, but is only applicable to copyright. The language has been proposed by the EU and it appears that India will provide alternative text. Notably, there does not appear to be a presumption of patent validity or trademark validity, in contrast to what the US has proposed in the TPPA.

Article 30 of the EU-India negotiating text covers border measures. While the TRIPS Agreement only requires border measures to apply to imported infringing goods, in Article 30(1), the EU has proposed its application to exportation, as well. The EU would also expand the availability of border measures from counterfeit trademarked or pirated copyright goods to also include “goods infringing designs or geographical indications.” India, in Article 30(2) seeks to explicitly exclude in-transit goods from application of border measures. The EU has proposed in Article 30(3) a broad “cooperation” provision with regard to exchange of information between customs officials. Any requirement of application of border measures to in-transit or exported goods is a clear TRIPS-plus measure (notably, the US has proposed border measures to apply to imports, exports, and in-transit goods). Article 30 also leaves out TRIPS safeguards, such as requiring the right holder to provide “adequate evidence” that a prima facie case of infringement exists. One positive aspect of the current negotiating text, however, is the absence of a demand that customs officials can act ex-officio, a proposal that has been made by the US in the TPPA.