Duke letter to White House on the problems with the TPP IP Chapter

Attached below is a May 20, 2015 letter from Duke researchers to the White House Office of Science and Technology Policy, setting our problems in the TPP IP Chapter. The letter is signed by Jason Cross, the Director of the Innovation & Technology Policy Lab (ITPLab) at the Sanford School of Public Policy & Duke Law School, at Duke University.

The whole letter (available in PDF format here) is worth reading. Here are a few sections from the letter:

As of the May 16, 2014 draft of the TPP, these important TRIPS provisions are dangerously limited and the risk this poses to public health should not be underestimated. The Article 30 exceptions are subject to Investor-state Dispute Settlement, and language protecting the Article 31 exceptions has been removed. The TPP draft resulting from the Ho Chi Minh Round vastly limits the of use compulsory licenses and makes it so that any use of remaining exceptions carries the risk of international arbitration. Among other things, these barriers greatly limit policy space available under TRIPS to prevent or correct the excessive costs of medicines. Furthermore, the recent drafts of the TPP contain broad requirements for the payment of damages for patent infringement. As of May 16, 2014 it reads:

“[The TPP member’s] judicial authorities shall have the authority to consider, inter alia, any legitimate measure of value the right holder submits, which may include lost profits, the value of the infringed goods or service measured by the market price, or the suggested retail price.”

Not only is this text inconsistent with the United States’ own position on the payment of remedies for patent infringement, but it also poses a threat to global health. Among other examples, the Affordable Care Act contains limitations on damages for biologic drug patents that would fail to meet the TPP standards. The ACA states that payment of a “reasonable royalty” should be the “sole and exclusive remedy” in cases of infringement. The current liability rules in U.S. law, seen in 35 U.S.C. §271(e)(6)(B), are designed to encourage full and transparent disclosure of biologic drugs during patent application and ensure production knowledge is available to potential competitors. The ability of biosimilar manufacturers to produce competitor products is important when considering product pricing and access to medicines. However, limiting liability rules to the standard contained in the TPP also threatens important safeguards and strategies for access across patents, trademarks, copyrights, and other forms of IP rights.

The contradiction between US law and the norms contained in the TPP opens up risk of investor state litigation. Ultimately, passage of the TPP would decrease state sovereign immunity. For example, after the precedent set by the U.S. Supreme Court in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank et al.(98531) 527 U.S. 627 (1999), Argued April 20, 1999–Decided June 23, 1999, state governments can decide their own remedies for IPR infringement. This power is currently coming under the spotlight as the Department of Veteran’s Affairs is asking for the use of 28 U.S.C. §1498 in order to be able to treat Hepatitis C Virus. The retail price suggested by Gilead is $95,000 per patient and the Veteran’s Affairs budget is unable to provide treatment at this price. 28 U.S.C. §1498 is supposed to allow governments use of a patented product with the payment of a reasonable royalty, but under the norms of the TPP, Gilead could ask for compensation equal to $95,000 per patient and deter the government from taking action to treat its veterans.