Nations such as Vietnam, Malaysia and Brunei, which are seeking greater access to markets in the U.S., Japan and Australia, may soon have to dramatically expand the private intellectual property rights they recognize as one price of admission to the Trans-Pacific Partnership trade pact.
Even Singapore -- a world leader in finance and logistics -- will have to deal with significant changes in intellectual property laws as it moves further into new fields such as biotechnology.
This week, trade officials and foreign ministers from the 12 countries that are negotiating the TPP are meeting in Hawaii to try to resolve outstanding issues related to the proposed agreement, which is intended to lower trade barriers and establish and enforce common standards for intellectual property, labor rights and environmental regulation, among other areas.
The negotiations have been conducted in secret. In November 2013, and again in October 2014, anti-secrecy group WikiLeaks disclosed partial drafts of the proposed pact. Those drafts indicated that the negotiators were discussing significant changes in the scope of intellectual property rights recognized by many of the participating countries, particularly the developing ones.
Perhaps the most significant change in intellectual property rights is that the TPP drafts require signatory nations to allow patents on diagnostic, therapeutic and surgical methods for the treatment of humans or animals. This represents a fundamental change for countries such as Vietnam and Singapore. Vietnam, for example, does not extend patents for preventative, diagnostic or therapeutic treatment methods for humans or animals. Singapore does not allow patents for surgical and therapeutic treatment methods for humans and animals, either.
The draft provision on this issue has been criticized as a handout to pharmaceutical and medical device companies and a hindrance to improving access to health care in developing countries.
The proposed changes to copyright laws are also dramatic. For example, the TPP extends the term of copyrights from the life of the author plus 50 years to life plus 70 years for works created by individuals. It also establishes terms of 94 years after publication or 120 years after creation for copyrights owned by corporations.
In addition, the TPP may require the adoption of much of the U.S. Digital Millennium Copyright Act. Signatory countries would have to enact laws barring circumvention of digital locks known as technological protection measures and treat violations as a criminal offense even if there is no copyright protection.
The drafts also included protections for data stored in computer networks through provisions on trade secrets. Each country, according to the drafts, shall provide for criminal penalties for any unauthorized, willful access to or disclosure of trade secrets stored in a computer system. Singapore's Computer Misuse and Cybersecurity Act already makes it an offense if a person gains unauthorized access to a company's computers. Other countries will have to adapt.
In addition to expanding the substantive scope of intellectual property rights, the TPP may require nations to enact greater procedural safeguards than most have now. For example, the leaked drafts state that applicants for preliminary injunctions need only present reasonably available evidence to show a sufficient degree of certainty that their intellectual property rights are being infringed. The drafts provide that preliminary injunctions shall be granted "expeditiously" and "except in exceptional cases" within 10 days.
Finally, as a significant enforcement mechanism, the TPP drafts provide that foreign investors may demand cash compensation if signatory nations "expropriate or nationalize" a covered investment, directly or indirectly. The term "investment" includes intellectual property rights. "Indirect expropriation" is any government action that interferes with distinct, reasonable investment-backed expectations.
As a result, if a foreign investor feels that any signatory country in which it has intellectual property rights has failed to protect those rights, that foreign investor may assert a claim for compensation. All such disputes will be heard by international arbitrators rather than national courts. Of course, any company will have to consider the political implications of asserting such a claim.
How are Asian companies to prepare for the TPP? The first step is education. Then, in developing countries like Vietnam, where it is reported that the production of smartphones now exceeds textiles and where Intel now produces computer chips, companies will want to take a new look at their contracts with vendors, employees and customers. Ultimately, as they create new intellectual property rights of their own, companies will want to make sure that they protect those rights.
Robert W. Kantner focuses on intellectual property litigation as a partner in the Dallas office of law firm Jones Day