Twenty years after TRIPs, are we any closer to global patent harmonisation?

With increasing market globalisation, corporations and patent experts are feeling the pressure to create IP assets that have value across a wide range of jurisdictions. Critical to this is the further harmonisation of national patent laws – but is this any closer to becoming a reality?

This year marks the 20th anniversary of the Marrakesh Agreement, which created the World Trade Organisation (WTO) and the Trade-Related Aspects of Intellectual Property Agreement (TRIPs). TRIPs is the world’s largest free trade agreement, with 161 members; but has it succeeded in creating a global substantive patent standard that raises the value of patents? Article 27.1 mandates that: “Patents shall be available for any invention whether products or processes, in all fields of technology, provided they are new, involve an inventive step and are capable of industrial application.” This is referred to as the TRIPs anti-discrimination clause.

Unfortunately, the very words that appear to require substantive harmonisation are those currently used by various countries to avoid it. The loophole occurs when national laws declare that selected innovations are not in fact inventions, thus bypassing Article 27.1 and denying or even invalidating patents.

This trend is rampant in the pharmaceutical sector. The United States faces an unprecedented judicial creation of patent law that now excludes a large scope of biotechnology innovations under the guise of patent eligibility. Canada has adopted the dangerous ‘promise doctrine’, which raises the utility requirement so high that patents on approved drugs are rejected for lack of usefulness. Australia now uses the theory of ‘manner of manufacture’ to exclude protection for isolated gene product innovations, rationalising that biotech companies did not actually make anything, notwithstanding that such diagnostics can be life transforming, do not exist in nature and require millions in investment as well as regulatory approval. India, Argentina and other countries exclude protection for a range of drugs under Section 3(d), despite a showing of novelty and inventive step. Brazil’s regulatory agency, ANVISA, has been granted the right to exclude drug patent protection as not being in the country’s interest, even if inventions have the necessary novelty and inventive step.

Software and computer innovations have not been spared. For example, the new US case law on patent eligibility now often excludes software even where it is tied to hardware. Business method patents and software are not patentable in Europe unless a technical problem has been solved.

Law schools teach that there is no right without a remedy. While international treaty organisations have their own adjudicating bodies for violations, WTO/TRIPs provides no private right of action for violations. Disputes can be raised only by one member country against another using a prescribed consultation process. A successful dispute petition allows the petitioner to retaliate in trade actions in this or another area, a potentially valuable national right. However, since the WTO covers a wide range of trade issues, raising an IP dispute might be answered with a dumping or tariff allegation, so countries typically pick their battles carefully.

National courts are not competent to adjudicate harm to private companies by the failure of a country to honour global treaty terms such as Article 27.1. Notwithstanding this, US and Australian litigants or amici have submitted court briefs in private disputes that the country’s judicial law violates TRIPs, although these have mostly fallen on deaf judicial ears. National legislatures should pass laws that ensure compliance with the substantive patent law anti-discrimination required by treaties to which their countries are a signatory, overruling judicial fiat if necessary. However, the legislatures are often preoccupied or unconvinced that this is in the national interest. And the odds against a ramification for inaction are in their favour: only 34 TRIPs disputes have been lodged since 1995, with only 11 challenges to national patent law, the last filed in 2001.

However, at least one action has been taken. After three Eli Lilly patents on approved drugs were invalidated in Canada for lack of utility, in 2013 Eli Lilly took the bold step of filing a notice of claim for arbitration under Chapter 11 of the North American Free Trade Agreement, on the basis that Canada’s promise doctrine amounts to a taking of property. Canada responded in early 2015 and the dispute is still ongoing. Regardless of whether Lilly succeeds, this demonstrates the frustration and financial loss global companies face when TRIPs’ promise of harmonised global markets has not been realised. While Eli Lilly footed the bill to research, develop and obtain approval for these drugs with unambiguous utility and public benefit, they have been handed over to Canadian generics companies to reap the profit.

If ratified, the new but much smaller Trans-Pacific Partnership Agreement (12 countries) provides little hope of increased global substantive patent law harmonisation, because the relevant language has been taken from TRIPs and the United States – a primary negotiator – has already joined the list of top countries with judicially created discriminative substantive patent laws contrary to Article 27.1.

So do we celebrate the 20th anniversary of TRIPs? Is Article 27.1 a national requirement, an aspiration or simply irrelevant? It is not time to pop the cork yet.

Until countries take the serious step of agreeing to and complying with treaties demanding global substantive patent law and honour the intent of their contractual obligation to incentivise innovation and new markets with uniformity, there will continue to be inconsistent laws and markets and insufficient international investment in excluded technologies. International treaty laws should be amended to allow for or expand private rights of action against non-compliance. Global patent value and monetisation are critically tied to global substantive harmonisation – they stand on the brink.

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