IP Watch | 24 November 2006
US-Russia Bilateral/WTO Deal Pushes New Standards For IP Protection
By William New
In its bilateral negotiation with the United States in order to join the World Trade Organization, Russia appears to have agreed to intellectual property rights standards that push those of the WTO and US law to new levels.
IP issues have been a top priority for the United States in recent years and particularly with Russia, where piracy and counterfeiting are seen as highly problematic. The negotiation with Russia had in a way blurred the lines between multilateral and bilateral agreements (IPW, WTO/TRIPS, 24 October 2005).
The two sides reached their [bilateral agreement on Russia’s terms for joining the WTO-6512] this week, and strongly focused on Russian IP rights enforcement efforts. In the US side letter on intellectual property rights, Russia appears to have given in to US demands to take IP provisions well above the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
This can be seen in particular in the terms for protecting information related to patented medicines. Russia committed to implementing TRIPS Article 39.3 requirements to “protect [undisclosed test or other] data against disclosure, except where necessary to protect the public; or unless steps are taken to ensure that the data are protected against unfair commercial use.”
TRIPS does not specify a length of time for protection, but Russia agreed to move to block by June 2007 (likely before its WTO accession) the unapproved use of undisclosed information provided for marketing approval for a minimum of six years, which many see as exceeding TRIPS. US law states protection should be for five years, which has been the standard included in recent US bilateral agreements, and which itself is has come under criticism. TRIPS also contains exceptions for governments that do not appear to be addressed in the bilateral deal.
The US side letter states that Russia “will work with the Duma to enact legislation and implementing regulations providing that undisclosed information submitted to obtain marketing approval, i.e., registration, of pharmaceutical products would provide for a period of at least six years of protection against unfair commercial use starting from the date of grant of marketing approval in the Russian Federation.”
During this period, the letter continues, “no person or entity (public or private), other than the person or entity who submitted such undisclosed data, could without the explicit consent of the person or entity who submitted the data, rely on such data in support of an application for product approval/registration.”
Any subsequent application for marketing approval granted during the six years would require the applicant to submit his own data or data used with the right holder’s authorisation, meeting the same requirements as the first applicant.
Potential Negative Impact on Russian Health Crises
Without specific time periods, generic drug producers are able to use the data to ramp up their products so they may hit the market upon expiration of drug patents. Patent holders see a need to increase protection of their data so as to ensure full benefits of patent lifespans they view as critical to recovering their research and development costs. But public health activists see problems as this could effectively extend the patent benefits beyond expiration by delaying generic producers’ activities.
Some countries, such as India, have chosen to implement the TRIPS standard of non-disclosure of test data without specifying a number of years, a source said. The source also said India blocked the United States’ effort to include a specific length of time during the early 1990s Uruguay Round negotiation that led to the TRIPS agreement.
“The terms on data exclusivity add a new and more restrictive element than even the China Working Party Report, paragraph 284, in that “public or private” entities are precluded from using undisclosed test data,” said Frederick Abbott, a law professor at Florida State University Law School who is an expert on IP agreements.
“The intent of this language would appear to be the prevention of even public non-commercial use of data, e.g., for supply of medicines to public health clinics (e.g., to treat HIV/AIDS),” Abbott said, “thereby aggravating concerns previously expressed regarding the impact these provisions may have on addressing serious public health problems through compulsory licensing, including government use.” This is permitted under the TRIPS agreement and recognised by the Doha Declaration and the 2005 TRIPS public health amendment, which reinforced countries’ right to waive TRIPS for public health reasons.
Of particular concern is that Russia, according to the World Health Organization, “is facing very serious public health problems in areas such as HIV/AIDS and tuberculosis, and access to medicines questions are very significant in this context,” Abbott said.
He said it was “widely anticipated” that the US would seek equal or stronger terms for Russia as it had for China since there has been congressional dissatisfaction with China’s implementation of IP provisions.
Binding Bilateral Agreement or Step to WTO Accession?
The US side letter was dated 19 November, signed by US Trade Representative Susan Schwab and sent to German Gref, the Russian trade minister. The side letters from each government are viewed by the Bush administration as representing a formal agreement.
The final line of the US letter states: “I have the honor to confirm that my government shares these understandings and that your letter and this letter of confirmation in rely constitute an agreement between our two governments.”
“As far as public international law is concerned, this is a treaty,” said Andrew Shoyer of the Sidley Austin law firm in Washington. It is enforceable under Section 301 of US trade law, but without its own dispute settlement mechanism, it would at a minimum “presumably be enforceable in the International Court of Justice,” he said.
But it is clearly not a WTO agreement enforceable under the WTO dispute settlement mechanism, Shoyer said. It remains to be seen whether the WTO secretariat will take the bilateral commitments into the WTO working party report. “If the commitments are reflected in the working party report, and if the paragraphs are incorporated by reference by the Protocol of Accession (that’s what normally happens), then the commitments in the exchange of letters become WTO commitments enforceable under the WTO dispute settlement mechanism,” he said.
The biggest part of the agreement by far is focused on a variety of specific actions to be taken by Russia to better protect and enforce IP rights against piracy and counterfeiting, especially in relation to copyrighted optical media such as CDs and DVDs as well as on the Internet. The US letter appears to lower the threshold for criminal penalties in these areas. Specific reference is made to shutting down a Russian-based online music download site called allofmp3.com, perhaps the biggest such site in the world.
Russia agreed to implement the World Intellectual Property Organization Copyright Treaty and the WIPO Performances and Phonograms Treaty. The US letter is less strong on agricultural chemical products, but pledges Russia to work cooperatively with the United States strengthen enforcement of IP rights on these.
The Final Path to Accession
In order to join the WTO, Russia has to complete bilateral negotiations with the other countries that chose to negotiate directly with it, but the US deal was seen as one of the most comprehensive, according to Sidley Austin. The best commitments made by Russia in each of its bilaterals will be available to all WTO members. The WTO working party on Russia’s accession will complete a final agreement.
For the United States to recognise Russia’s WTO membership and get the benefits of its commitments, the US Congress in 2007 will have to approve legislation granting Russia Permanent Normal Trade Relations (PNTR). The passage of PNTR for China several years ago proved highly contentious. In 2007, the Congress will revert to Democratic Party control, which raises new questions about the fate of trade deals negotiated by the Republican administration.
The United States has retained leverage in the negotiation because all members of the working party, including the United States, must agree with the results before Russia can accede to the WTO, sources said. Implementation of WTO agreements is left up to the governments but with the specific dates in this case, accession might be blocked if the actual implementation, rather than the promise of implementation as in the past, is seen as inadequate by other members. But as Shoyer noted, “On its face, it is not a commitment to pass legislation,” but rather to work toward legislation by the agreed dates.
US Industries Hail Agreement
US industry groups concerned with intellectual property rights, including film, music, pharmaceuticals, and manufacturing praised the agreement but said final support would be conditioned upon Russia’s upfront implementation of commitments, a point echoed by Schwab in recent comments.
“This is so important, because a lesson we learned from China’s WTO accession is that we have to see intellectual property enforcement come up to speed before - not after - we sign on the dotted line,” said Frank Vargo of the National Association of Manufacturers.
Pharmaceutical Research and Manufacturers of America President and CEO Billy Tauzin, in a statement, praised Russia’s commitment to “strong intellectual property rights” which he called “the life blood of the innovative biopharmaceutical industry.”
“Russia has agreed to provide a high standard of data protection for pharmaceuticals in its domestic law and this is a clear success for Russian patients,” Tauzin said. The industry will push in the ongoing multilateral talks at the WTO “to resolve other outstanding market barriers such as existing preferences for local manufacturing,” he said. The group also predicated its support for PNTR and WTO accession on Russia’s implementation of the agreed-upon legislation.
Dan Glickman, chairman and CEO of the Motion Picture Association of America, praised the enforcement provisions, but stated, “Equally important is the affirmation by the United States that it will veto Russia’s accession to the WTO unless Russia makes substantial progress on the agreement’s elements.”
Mitch Bainwol, chairman and CEO of the Recording Industry Association of America, echoed these views. “The administration and Congress must insist on achievement of these benchmarks before concluding a multilateral agreement that will pave the way for Russia’s entry into the WTO,” he said in a statement. “What happens next is completely in the hands of the Russian authorities.”
Separately, the UN Educational, Scientific and Cultural Organization (UNESCO) issued a release recently stating that it had begun participating in an initiative of the IPOS UNESCO IFAP to forward seized pirated CDs and DVDs to charitable purposes instead of destroying them. For instance, DVDs of children’s stories have been sent to children’s libraries in Moscow and elsewhere.