On 18 December 2012 and 20 December 2012, the World Trade Organization (WTO) undertook a trade policy review of the United States of America. All members of the WTO are subject to review under the Trade Policy Review Mechanism (TPRM). The questions raised by WTO Members during the US TPR touched upon on compulsory licensing (including cases of judicial compulsory licensing following eBay v. MercExchange), copyright (Golan v. Holder), the Special 301 report and the Medicines Patent Pool. On 30 April 2013, the WTO released the records of the meeting including WT/TPR/M/275. In addition, KEI obtained the 374 paged room document RD/TPR/108 (17 December 2012) which contains advance written questions submitted by WTO Members and the responses provided by the United States. These questions and responses are expected to be reproduced in document WT/TPR/M/275/Add.1.
Although the activities of the WTO TRIPS Council receive much scrutiny during discussions of controversial issues such as ACTA, TPP, public health and tobacco plain packaging, the WTO’s trade policy reviews have not traditionally attracted the same level of attention. While discussions within the Trade Policy Review Mechanism are often routine in nature, this is not always the case – as this post will highlight.
The following piece is a walkthrough of the December 2012 trade policy review of the United States in the context of IPRs and access to knowledge. The questions raised by Australia, Brazil, Chile, China, India and others sought clarity on US trade policy in light of its WTO commitments. Some of these Members framed their questions in order to find evidence of policy coherence between United States’ insistence on ratcheting up IP norms in free trade agreements, on the one hand, while publicly supporting the Doha Declaration on the TRIPS Agreement and Public Health and advocating for HIV treatment scale up. The following extracts are taken from room document RD/TPR/108.
On Mayo v. Prometheus, Australia asked:
What changes have been implemented to patent office practices as a result of the decision in Mayo v. Prometheus?
The US responded:
The United Patent and Trademark Office (USPTO) implemented a new procedure for examining process claims for subject matter eligibility in view of the Supreme Court decision Mayo v. Prometheus. For a memo outlining the changes, please see: http://www.uspto.gov/patents/law/exam/2012_interim_guidance.pdf.
Brazil noted that USTR’s raison d’être was to “support and implement the Administration’s commitment to aggressively protect American IP overseas”.
In light of this mission, Brazil asked:
In what ways does the United States ensure that the “Administration’s commitment to aggressively protect American IP overseas” does not contravene provisions of the TRIPS Agreement, especially Articles 7 and 8 of the agreement?
The US remarked:
The United States is committed to abiding by all provisions of the TRIPS Agreement. The United States Government strives to work cooperatively and constructively with its trading partners, through direct consultations and information exchanges.
On the issue of increased litigation by “non-practicing entities”, Brazil noted:
The Leahy-Smith America Invents Act is a major reform of U.S. patent law, aimed at boosting competitiveness by modernizing patent law. Another topic arising in patent law in the recent past is the surge in patent litigations, often by so-called “non-practicing entities” (NPEs), which could allegedly stifle innovation and therefore reverse the intended effect of the patent system. Attempting to address this issue, the “Saving High-Tech Innovators from Egregious Legal Disputes Act” (HR 6285) was introduced in the American Congress in 2012; in addition, the Federal Trade Commission and the Department of Justice announced a joint public workshop to explore the impact of patent assertion entity (PAE) activities on innovation and competition and the implications for antitrust enforcement and policy.
If available, could the United States please provide information on the impacts of NPEs and PAEs on innovation and estimate regarding costs of litigation for innovator companies? Has there been observed any reduction on innovation of American firms caused by the surge in patent litigation?
The US responded:
The U.S. Government is studying the consequences of patent litigation by nonpracticing entities or patent assertion entities.
On the subject of biologics, data exclusivity and the Doha Declaration, Brazil noted:
Among other international treaties and declarations, the TRIPS Agreement states that IP rights should not be a barrier to the protection of public health, an understanding reiterated by the Doha Declaration on the TRIPS Agreement and Public Health. Paragraph 181 provides information related to the Patient Protection and Affordable Care Act and the 12- year period of data exclusivity from the time of FDA approval of the original product, after which follow-on biologics would be able to rely on data provided for the original approval.
Brazil posed two questions:
1. Could the United States provide information related to the impact of the approval of biological products “biosimilar” to or “interchangeable” with a biological product already licensed by the FDA? Was there any impact regarding the price of such products to the consumer?
2. If any, are there measures available for third parties to ensure that the 12-year period of data exclusivity does not inadvertently provide for an extension of the 20-year period of patent protection of patented biological products?
The US response to the first question:
To date, the United States FDA has not approved a biological product as biosimilar or interchangeable under the Biologics Price Competition and Innovation Act of 2009 (BPCI).
The US response to the second question:
No. Data exclusivity is separate and independent of patent protection. Data exclusivity prevents unfair commercial use of clinical safety and efficacy data and information required by our Food and Drug Administration for the marketing approval of a drug product, by preventing reliance on this data for a limited period by third parties for their own marketing approval without the consent of the originator. A patent, on the other hand, provides its owner with exclusive rights under Article 28 of the TRIPS Agreement to prevent others from making, using, selling, offering for sale, or importing the subject matter of the patent without consent for a limited period. These are separate and independent forms of intellectual property which protect separate subject matter. Data exclusivity cannot extend patent protection and patent protection cannot extend data exclusivity.
Brazil asked USTR about four cases involving judicial compulsory licensing involving patents on health technologies following the precedent set by eBay Inc. v. MercExchange, LLC precedent.
As noted by James Love in KEI Research Note 2007:5, the “eBay decision is widely understood to give judges the flexibility to effectively grant non-voluntary authorizations to use patents or copyrights, as an alternative to the enforcement of the exclusive right.”
In light of this decision, Brazil noted;
Regarding the enforcement of IP rights, recent court decisions in the United States have allegedly responded to instances of infringement of medical patents by denying injunctive relief, instead granting monetary damages, often in the form of royalty payments, what would in effect provide for a compulsory licensing. Four examples of such cases are: Voda v. Cordis Corp., Innogenetics, N.V. v. Abbott Labs, Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, and Medtronic Somafor Danek USA, Inc. v. Globus Med., Inc.
Brazil asked USTR:
Could the United States please confirm and elaborate on the decision of such cases? Are the monetary damages allegedly issued a type of compulsory licensing?
USTR responded in the following manner:
The United States does not agree with the interpretation of such cases suggested by the question. The remedies in these cases reflect judicial determinations of the most appropriate form of relief in particular cases based on the application by those courts of relevant legal standards to the facts of those cases, not a form of compulsory licensing. The U.S. patent law (Title 35 of the U.S. Code) does not contain any compulsory licensing provisions.
On the relationship between WTO trade policy reviews and the implementation of the TRIPS Agreement, Chile asked:
Chile would welcome a more detailed explanation on the statement made in Paragraph 167 regarding that the U.S. seeks to take advantage of trade policy reviews of its trading partners to achieve constructive engagement around the implementation of the TRIPS Agreement.
USTR provided an extensive response.
An excerpt from the 2009 USTR statement on the WTO Trade Policy Review of Chile provides an example of how the United States views the opportunity for constructive engagement around the implementation of the TRIPS Agreement through trade policy reviews. It is provided below.
There are, nonetheless, specific areas of Chile’s regime where action could lead to improved trade and investment opportunities and flows. We have referred to them in our questions, but would like to touch on certain of those areas today.
First, we acknowledge that Chile has made some positive efforts to improve its IPR regime, including the creation of a specialized unit within the Chilean police force to handle IPR crimes. In addition, as the Secretariat notes, Chile recently opened a National Institute for Industrial Property to oversee administrative actions related to industrial property. We also understand that Chile recently acceded to the Patent Cooperation Treaty.
Nevertheless, Chile’s IPR performance continues to fall well below our expectations. For example, the United States remains concerned about inadequate enforcement against copyright piracy and trademark counterfeiting. We understand that Chile’s Congress continues to consider legislation that addresses copyright and other IP issues. We would particularly like to learn more about the status of Chile’s pending copyright legislation as well as the government’s work to strengthen enforcement mechanisms to fight trademark counterfeiting and copyright piracy.
On the question of what role USTR viewed the WTO TRIPS Council playing, Chile noted:
USTR sees the TRIPS Council as a forum for sharing experiences in order to ensure effective implementation of the obligations regarding intellectual property enforcement. Chile would welcome details on what other areas of the TRIPS Council’s work, beyond IP enforcement, is considered important by the U.S.
U.S. objectives for the TRIPS Council in 2012 provide the U.S. perspective on the
important multi-faceted work that the Council does, including use of the TRIPS Council to:
- continue efforts to ensure that developing country Members fully implement the TRIPS Agreement;
- engage in constructive dialogue regarding the technical assistance and capacity related needs of developing countries, and especially LDCs, in connection with TRIPS Agreement implementation;
- continue to encourage a fact based discussion within the TRIPS Council on enforcement and other provisions of the TRIPS Agreement; and
- ensure that provisions of the TRIPS Agreement are not weakened.
On the question patentability of human organisms and “other organisms”, Chile sought clarity from USTR by noting:
new federal legislation now considers, following a long lasting policy applied by the USPTO, that directed to or encompassing human organisms are not patentable subject matter. In this regard, we would welcome insights on patentability of other organisms in U.S. law.
The Leahy-Smith America Invents Act (AIA) restates the long-standing policy that no patent may issue on a claim directed to or encompassing a human organism. The federal courts and the USPTO have issued a number of decisions and guidelines that provide guidance regarding the patentability of nonhuman organisms.
The decision of the Supreme Court in Diamond v. Chakrabarty, 447 U.S. 303, 206 USPQ 193 (1980), held that microorganisms produced by genetic engineering are not excluded from patent protection by 35 U.S.C. 101. The test set down by the Court for patentable subject matter is whether the living matter is the result of human intervention.
Following the reasoning in Chakrabarty, the Board of Patent Appeals and Interferences determined that animals are patentable subject matter under 35 U.S.C. 101. In Ex parte Allen, 2 USPQ2d 1425 (Bd. Pat. App. & Inter. 1987), the Board decided that a polyploid Pacific coast oyster could have been the proper subject of a patent under 35 U.S.C. 101 if all the criteria for patentability were satisfied. Shortly after the Allen decision, the Commissioner of Patents and Trademarks issued a notice (Animals – Patentability, 1077 O.G. 24, April 21, 1987) that the Patent and Trademark Office would now consider non-naturally occurring, nonhuman multicellular living organisms, including animals, to be patentable subject matter within the scope of 35 U.S.C. 101.
With respect to plant subject matter, the Supreme Court has held that patentable subject matter under 35 U.S.C. 101 includes newly developed plant breeds, even though plant protection is also available under the Plant Patent Act (35 U.S.C. §§ 161–164) and the Plant Variety Protection Act (7 U.S.C. § 2321 et. seq.). J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’ l, Inc., 534 U.S. 124, 143-46 (2001). The USPTO also has issued guidelines regarding the patentability of nonhuman organisms. Please see Section 2105 of the Manual of Patent Examining Procedure for further explanation: http://www.uspto.gov/web/offices/pac/mpep/s2105.html
With respect to copyright, Chile sought more clarity on the Golan v. Holder Supreme Court decision in relation to the Uruguay Round Agreements Act:
Regarding Section 514 of the Uruguay Round Agreements Act, Chile would welcome more information on the copyright status of foreign works that were previously in the public domain as a consequence of the U.S. Supreme Court decision in the Golan v Holder case.
The 2012 U.S. Supreme Court decision in Golan v. Holder upheld the constitutionality of Section 514 of the Uruguay Round Agreements Act, which in 1994 amended the Copyright Act to “restore” protection to certain qualified foreign works that were in the public domain in the United States, but were protected in their country of origin. The court’s decision did not affect the copyright status of foreign works in the United States.
Chile noted that the methodological deficiencies in the Special 301 Report:
In consideration to the priority given by U.S. authorities to effective IP enforcement in foreign markets, as stated in Paragraph 192, Chile would welcome information regarding if the promotion of enforcement of U.S. IP rights through mechanisms such as the Special 301 Report, considers future adjustments to overcome the methodological constraints showed by actual results.
The USTR’s defense of the Special 301 Report noted:
Each year, as required by U.S. law, the Office of the United States Trade Representative (USTR) issues a Special 301 Report cataloguing specific IPR problems in numerous countries worldwide. The review of each trading partner’s IPR regime is done on a case-by-case basis; all relevant factors are taken into consideration. USTR considers information submitted by interested stakeholders and U.S. Embassies located in foreign capitals. In addition, USTR actively encourages foreign governments to submit material which can be taken into account during these reviews. A country is placed on the Special 301 list if it is clear that it “denies adequate and effective protection of IPR or fair and equitable market access to U.S. persons that rely upon IP protection.” In addition to citing specific concerns, Special 301 also affords an opportunity to give credit where it is due, such as by improving the standing of countries when there are significant improvements in IPR protection and enforcement.
The Special 301 process entails ample opportunities for engagement with individual trading partners to discuss IPR concerns and possible ways to address them. Throughout the course of the year, the United States meets regularly with our trading partners to discuss IPR concerns. Officers at U.S. Embassies also are engaged actively to convey specific IPR concerns to host-country governments and to discuss potential resolutions.
On the topic of measures to mitigate the abuse of intellectual property rights from stifling free competition and innovation, China raised the following point:
Since the last review, does the US have any new measures to regulate intellectual property rights abuses and to balance the interests of intellectual property right holders and the social and public welfare so as to prevent intellectual property rights abuses from hampering free competition and technology innovation?
The United States replied:
The Federal Trade Commission (FTC) and the Department of Justice (DOJ) develop antitrust policy and enforce the antitrust laws in the United States. The FTC and DOJ recently held a public workshop to explore the impact of patent assertion entity (PAE) activities on innovation and competition and the implications for antitrust enforcement and policy. Section 34 of the America Invents Act also mandates that the Government Accountability Office (GAO) conduct a study into the consequences of patent litigation by non-practicing entities or patent assertion entities.
USTR singled out India for the issuance of a compulsory license for sorafenib in the Special 301 Report of 2012, specifically quoting the testimony of Teresa Stanek Rea (then Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office) before the Subcommittee on Intellectual Property, Competition and the Internet Committee on the Judiciary of the U.S. House of Representatives on the subject of “International IP Enforcement: Protecting Patents, Trade Secrets and Market Access” on 27 June 2012 in which she declared,
Unfortunately, compulsory licenses dissuade pharmaceutical and biotech companies from innovating or from bringing their products into countries that grant these compulsory licenses. In the case of India, I was quite dismayed and surprised when they did, indeed, decide to grant that compulsory license for a reason that, I think, did not meet international standards and was not due to, for instance, a national crisis.
India questioned USTR:
While India respects the right of United States to articulate its interests, India would like to know if the US holds that a compulsory licence for a pharmaceutical product can be issued on under conditions of a national crisis. If yes, US may kindly identify the relevant provisions under TRIPS and any other international legal document for this position. US is also requested to provide information on any type of non-voluntary licensing that is permitted under US IP laws, especially the law on Patents.
While USTR answered India’s question on TRIPS, it failed to disclose any information on the non-voluntary use of patents permitted under US legislation.
The United States recognizes that Article 31 of the TRIPS Agreement permits other use of the subject matter of a patent without the authorization of the rightholder under certain conditions. As affirmed in the Doha Declaration on TRIPS and Public Health, the United States respects a trading partner’s right to protect public health and, in particular, to promote access to medicines for all, and supports the vital role of the patent system in promoting the development and creation of new and innovative lifesaving medicines. Consistent with these views, the United States respects its trading partners’ rights to grant compulsory licenses in a manner consistent with the provisions of Article 31 of the TRIPS Agreement, and encourages its trading partners to consider ways to address their public health challenges while maintaining IPR systems that promote investment, research, and innovation.
On the public health objective of HIV treatment scale up, India posed the following perspicacious question to USTR:
How does the US reconcile its stated objectives for the scale up of HIV treatment with the demands for ever increasing IP protection in developing countries in bilateral talks?
USTR’s deflected India’s question while endeavoring to demonstrate policy coherence between public health and promoting strong IPR protection and enforcement:
Advancing the treatment of HIV/AIDS and promoting strong intellectual property protection and enforcement are mutually consistent objectives. The United States supports these objectives in its bilateral as well as regional and multilateral engagement, including in the WTO, the United Nations, and other institutions such as the World Intellectual Property Organization and the World Health Organization. The United States will continue its engagement to ensure that public health challenges are addressed and that intellectual property rights protection and enforcement are supported as mechanisms to promote research and innovation.
India mentioned United States’ support for the Medicines Patent Pool while highlighting the fact that companies that refused to voluntary license their patents to the Pool were natural targets for compulsory licensing.
The US has shown support for the Medicines Patent Pool – Does the US agree that companies that refuse to voluntarily license their ARV patents to the pool are vulnerable to compulsory licensing? What does the US undertake to persuade reluctant companies to license their ARV patents for use in Developing and LDCs?
USTR’s response, while detailed, did not address India’s question on whether companies that refused to voluntary license their patents to the Pool were vulnerable to compulsory licensing.
The United States supports patent pools when they are appropriate. As a global leader in research and development of medicines, the United States has an important role in promoting voluntary mechanisms to increase the competition to provide innovative and affordable health technologies to people in low and middle income countries.
In particular, the United States has strongly supported the Medicines Patent Pool (MPP) since its beginnings. The US National Institutes of Health (NIH) was the first entity to sign in September 2010 a license agreement with the MPP with the strong support of the US Administration. The patents shared within the MPP by the US NIH relate to protease inhibitor HIV medicines, used mainly to treat drug resistant HIV infections. NIH makes these patents available through the MPP to all low and middle income countries on a low royalty or royalty-free basis.
The agreements and ongoing negotiations between the MPP and patent rights holders, and with potential generic manufacturers of medicines, have already resulted in engagement with several companies to produce HIV medicines at a lower cost. The United States encourages other companies to consider arrangements with the MPP to voluntarily make available their patents for this important goal.
The United States strongly supports the guiding principles of the MPP as follows: 1) the Pool operates on a voluntary basis; 2) the Pool operates within the current intellectual property framework such that patent holders are compensated through appropriate royalties; 3) the Pool is an additional mechanism to promote access to medicines.
These principles are in line with the U.S. belief that the IP system, including patents, provides critical incentives to the development of drugs. Developing new life-saving medicines is a very risky endeavor, and it is necessary to provide incentives to the private sector to carry out this work. The ability to patent an invention is critical to ensuring that there are incentives for developing new lifesaving medicines, and also is fundamental in ensuring that the benefits of these medicines can be shared widely. By stressing the voluntary nature of participation, the MPP does not threaten the intellectual property of the participants, and the system of incentives in place for developing new medicines.