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USMCA: Intellectual Property Rights (IPR) Updated January 6, 2020 USMCA: Intellectual Property Rights (IPR) Background IPR Chapter of USMCA The United States-Mexico-Canada Agreement (USMCA) is The IPR chapter aims to support technological innovation a proposed free trade agreement (FTA) negotiated among to benefit both producers and users, while promoting a the three parties to update and replace the 1994 North balance of rights and obligations. It is enforceable through American Free Trade Agreement (NAFTA). On November government-to-government dispute settlement. General 30, 2018, President Trump and the leaders of Mexico and obligations include upholding international agreements and Canada signed USMCA. Congress would need to pass the providing “national treatment”—not discriminating against legislation to implement the agreement before it can enter foreigners on IPR. Some provisions in the IPR chapter have into force. On December 10, 2019, the three countries phase-in periods for Canada and Mexico. (IPR issues also agreed to a protocol of amendment to the USMCA, which arise in the USMCA investment chapter; as a form of affects some IPR provisions. investment, IPR benefits from USMCA investor USMCA would make notable changes to NAFTA protections. See CRS In Focus IF11167, USMCA: provisions on intellectual property (IP)—creations of the Investment Provisions, by Christopher A. Casey and M. mind embodied in physical and digital objects. IPR are Angeles Villarreal.) time-limited rights that governments grant to inventors and Patents artists to exclude others from using their inventions and Patents protect new inventions, such as pharmaceutical creations without permission. IP is a key source of U.S. products, chemical processes, business technologies, and comparative advantage; advancing IPR protection globally computer software. USMCA defines patentable subject has been a U.S. trade negotiating objective since 1988 (P.L. matter as new products and processes. Patent protection for 100-418). IPR trade agreement provisions were first new uses, methods, or processes of a known product were included in NAFTA and, subsequently, the World Trade included in the USMCA, but were removed by the Organization (WTO) Agreement on Trade-Related Aspects amendment. Under TRIPS, patented inventions must of Intellectual Property Rights (TRIPS). The 2015 Trade receive a minimum term of 20 years of protection. USMCA Promotion Authority (TPA, P.L. 114-26) retains prior U.S. requires adjustments of patent terms for “unreasonable” trade negotiating objectives for U.S. trade agreements to delays in the patent examination or regulatory approval “reflect a standard of protection similar to that found in processes. “Unreasonable delays” include a delay of more U.S. law” (“TRIPS-plus”), and adds new objectives to than five years from the date of filing or three years after a combat cyber theft and protect trade secrets. request for examination of an application, whichever is later. Select IPR Provisions in USMCA USMCA includes a notification system and procedures Several provisions in USMCA reflect new or updated issues not (e.g., judicial or administrative proceedings) to assert patent in current U.S. FTAs, including the following: rights or to challenge a patent’s validity. These procedures Internet Service Providers (ISPs). Establishes flexibilities to are more flexible than “patent linkage”—a provision address ISP copyright liability. common to many prior U.S. FTAs whereby regulatory Geographical indications (GIs). Requires administrative authority cannot grant marketing approval to a generic drug procedures for recognizing and opposing GIs, which protect without the patent holder’s permission. distinctive products from certain regions, including guidelines for Regulatory Exclusivities determining “common” names. Also includes transparency and Some USMCA provisions specific to pharmaceuticals aim, due process procedures for GIs that parties protect through based on U.S. trade negotiating objectives, to “encourage international agreements. innovation and access to medicine.” Yet debate exists on Trademarks. Extends trademark protection to sounds and whether USMCA appropriately incentivizes research and “collective marks” and removes administrative requirements to development for new medicines while also allowing enable easier trademark protection and enforcement. affordable access to medicines through market entry of Trade secrets. Requires criminal procedures and penalties for generic medicines. In USMCA, the debate has centered on trade secret theft, including cyber theft; clarifies that state- regulatory exclusivity for biologic drugs—drugs made owned enterprises must protect trade secrets. from living organisms (see figure below). Enforcement. Extends IPR enforcement to the digital Unlike most patented products, pharmaceuticals must go environment. through a regulatory approval process before they can be marketed. Patent holders (generally, brand-name drug IP-intensive goods and services are an important part of companies) must submit test data) to the regulatory U.S. trade with Canada and Mexico. The United States has authority—the Food and Drug Administration (FDA) in the expressed concern over certain IPR policies in both United States—to make the case for a drug’s safety and countries in recent years. effectiveness. The market approval process runs https://crsreports.congress.gov USMCA: Intellectual Property Rights (IPR) concurrently with any applicable patent term. Thus, the Trade Secrets monopoly protection afforded by the patent term effectively A trade secret is confidential business information (e.g., is shortened by the time it takes for marketing approval. formula, customer list) that is commercially valuable. A follow-on pharmaceutical, such as a generic drug or USMCA requires criminal procedures and penalties for biosimilar biologic, can obtain approval via an abbreviated trade secret theft, including through cyber-theft and by process by relying upon the test data generated to support state-owned enterprises. approval of the reference (brand-name) drug. To balance Trademarks interests in competition while encouraging innovation, Trademarks protect distinctive commercial names, marks, federal law establishes periods of exclusivity that limit and symbols. USMCA, among other things, provides FDA’s ability to approve marketing applications for follow- trademarks with a renewable, 10-year period of protection on pharmaceuticals under certain circumstances. (as in U.S. law) and removes administrative requirements to Regulatory exclusivity prevents a competing firm from enable easier protection and enforcement of trademarks. relying on the reference product’s data to obtain regulatory approval of a generic drug or biosimilar for a set period of Geographical Indications (GIs) time. In practice, regulatory exclusivities may delay the GIs are geographical names that protect the quality and development of the generic product during that time, which reputation of a distinctive product from a region (e.g., may overlap with, or in some circumstances run beyond the Chiapas coffee, Florida oranges, Canadian whiskey). The expiration of any applicable patents. For chemical drugs, United States aims to address GI protections that can U.S. law provides a general exclusivity period of 5 years, improperly constrain U.S. agricultural market access in which U.S. FTAs post-NAFTA have incorporated. other countries by protecting terms viewed as “common,” such as parmesan cheese. USMCA contains due process U.S. law currently provides a 12-year period of exclusivity procedures for recognizing and opposing GIs, guidelines for for biologic drugs. USMCA, as originally negotiated, would determining when a name is common, and transparency have required a period of protection of at least 10 years, requirements for GI protection in international agreements. however this provision was dropped in the Amendment. Industrial Designs Figure 1. Regulatory Exclusivity in USMCA Countries Industrial designs are the ornamental or aesthetic aspects of a product. USMCA provides a minimum term of 15 years of protection for industrial designs, compared to 10 years in NAFTA. It also requires parties to provide an electronic industrial design system for applications and information. Enforcement USMCA includes commitments on civil, criminal, and other national enforcement for IPR violations, such as copyright enforcement in the digital environment, criminal penalties for trade secret theft and camcording, and ex- officio authority for customs officials to seize counterfeit Source: CRS. trademark and pirated copyright goods. Note: *The biologics provision was contained in the USMCA, as Issues for Congress originally negotiated, but it was dropped in the revised agreement. USMCA’s approach to IPR and U.S. trade policy is at the forefront of congressional debate and a potential vote on Copyrights and Related Rights implementing the agreement. A central issue is whether Copyrights provide creators of artistic and literary works USMCA advances U.S. trade negotiating objectives and with exclusive rights to reproduce, publicly perform and protects IPR and innovation and other interests, such as display, and distribute their works. Debate exists over affordability of pharmaceuticals. Treatment of biologics is balancing copyrights and the free flow of information, and especially actively debated in this regard. Some Members digital trade raises new issues. USMCA includes: of Congress approve eliminating the 10-year regulatory
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