Meera Nair

the $500 million tip of the TPP iceberg

In Posts on July 13, 2014 at 8:19 pm

Last week, international negotiators met in Ottawa to further discuss the Trans-Pacific Partnership (TPP) agreement. With the usual shroud of secrecy, few details regarding agenda and outcomes were released for public consumption. Nevertheless, based on a leaked copy of the chapter relating to intellectual property, there is sufficient reason for concern with respect to copyright. As reported last week (see Electronic Frontier Foundation here, Michael Geist here, Public Knowledge here, and VICE here) Canada’s copyright regime is likely to be challenged on at least two fronts:

  • the role of internet service providers (will they remain as neutral providers or become key figures in policing the internet?)
  • copyright duration (will Canada’s life-plus-fifty term give way to life-plus-seventy?)

Geist reminds us that the TPP will touch more than copyright; Canada’s privacy and patenting regimes are also implicated. Indeed, the question of Canadian sovereignty with respect to patenting is already at risk, via Eli Lilly’s $500 million challenge to the Canadian government regarding the loss of two secondary-use patents. The means by which Eli Lilly has launched its claim is a consequence of the Investor-State Dispute (ISD) mechanism of NAFTA.

Courtesy of Dennis Lowe and National Geographic

Courtesy of Dennis Lowe and National Geographic

Our made-in-Canada copyright regime has been painstakingly crafted over ten years of deliberative thought; to watch it cast aside will be difficult. But more deleterious will be further entrenchment of the ISD mechanism through the TPP. Yet this issue has received little attention in Canada. Perhaps in part because the topic is not sexy; Investor-State Dispute sounds painfully dull. The phrase cannot be summarily equated to freedom of expression, invasion of privacy, or even the dubious claim that a hit television series could not have been made under the TPP. ISDs are constructed with arcane language that seemingly has little to do with everyday life, but they are potentially lethal as is being demonstrated by Eli Lilly.

Eli Lilly provides the bizarre spectacle of a corporation suing a government because a court decision did not favour the corporation. It has vehemently insisted that the decision of Canadian courts not to uphold two secondary-use patents is a violation of investor safeguards provided through NAFTA; specifically, those relating to minimum standard of treatment, non-discrimination, and expropriation. That the courts rejected the patents because the drugs concerned did not live up to the standard of utility set by Canadian law, was not reasonable according to Eli Lilly. To take action against Canada required contorting the ISD chapter of NAFTA, despite the fact that the chapter in question does not apply to intellectual property. The entire event would read like a lurid novel, if novels were written about intellectual property and national sovereignty.

In a report dated to March 2013, Public Citizen provides a meticulously researched account of Eli Lilly’s actions and the operation of ISDs within trade agreements. At that time, Canada was only facing a $100 million challenge (Eli Lilly has since upped the ante); even so, Public Citizen did not miss the irony at hand:

… while Canada faces an investor-state challenge from Eli Lilly, the country has joined negotiations to establish the TPP, which would expand the investor-state system further. To date, Canada alone has paid more than $155 million to foreign investors after NAFTA investor-state attacks on energy, timber, land use and toxics policies. Underlying Eli Lilly’s claim against Canada is the notion that government patent policies and actions are subject to the investor privileges provisions of the agreement.

Public Citizen observes that Eli Lilly’s actions marks the first occasion of an intellectual property challenge occurring under the auspices of NAFTA’s ISD provisions. Our previous “first”, the first challenge of any kind, does not offer much comfort, resulting as it did in a loss both monetarily and for public health. Briefly, in 1997 a ban on the gasoline additive MMT was repealed by the Canadian government in response to opposition by Ethyl Corporation, the American producer of the additive. At the time, Public Citizen wrote:

The Canadian government settled the NAFTA suit yesterday agreeing to pay Ethyl $13 million in damages and to cover the company’s legal costs. It will also proclaim publicly that MMT is “safe” in direct contradiction of the view of its national environmental protection agency.

With respect to Eli Lilly’s present action, Michael Geist and E. Richard Gold (Professor, Faculty of Law, McGill University) have both indicated that the corporation’s chances of winning are slim. Notably, in a briefing session recently held in Washington DC, Gold indicates that “… no competent tribunal could rule in Eli Lilly’s favor”. We can only hope that both Geist and Gold are correct. But competence might prove a relative term; so far, arbitration tribunals have not distinguished themselves in weighing public interest (as a domestic court of law would) into the decision-making process. (Public Citizen has thoroughly documented past arbitration decisions, with added detail for some of the more egregious outcomes.) Moreover, even if Canada secures a win, that does not necessarily exclude involvement in costs.

The Washington DC briefing session was hosted by the firm of Stern, Kessler, Goldstein and Fox on 5 June 2014, with all the presentations posted online. I am hard pressed to choose a favorite but Simon Lester (Trade Policy Analyst, Cato Institute) raises the issue of Canada’s increasing involvement with ISDs. Despite some indication from the Canadian government that CETA (the impending trade deal with the European Union) will mitigate the ISD risks, Lester notes that Canada is simply trying to “tweak the language” to ensure that court decisions cannot be challenged. “…  what I have seen written is that the only changes are that no claims can be made under expropriation, but there are more avenues [of claim]… the slight tweaks that Canada wants to make are probably not enough.”

If the Canadian government is not decisively protecting sovereignty within a bilateral trade negotiation, it is unlikely that we will do better in the multi-national forum of the TPP.

There is much more that could and should be written about ISDs but, for now, Lester shall have the last word. In his presentation, he asks an important question: “Normally, the Supreme Court gets the final word. But apparently, there’s an international court system above the domestic Supreme Court system.  … Is everybody okay with that?”

 

 

 

 

 

  1. […] Nair, Fair Duty, Link (CC-BY)]  ]Last week, international negotiators met in Ottawa to further discuss the Trans-Pacific […]

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