On September 30, 2018, the US, Mexico and Canada agreed to replace the North American Free Trade Agreement (NAFTA) with a new comprehensive trade pact, called the US-Mexico-Canada Agreement (USMCA). Chapter 20 of the USMCA deals with intellectual property. The chapter includes provisions updating the almost 25-year old NAFTA as well as new requirements based on the provisions of the Trans-Pacific Partnership (TPP). President Trump repudiated the TPP when he took office in January 2017; to a large extent, therefore, the USMCA reinstates rules that the TPP adopted, but the US abandoned. The following are a few of the relevant provisions of the USMCA.
Patent Term Adjustment: Article 20.F.9 of the USMCA requires the countries to extend a patent’s term when the patent office has encountered unreasonable delays in granting the patent—more than five years from the date of filing or three years from a request for examination. Unreasonable delays are generally those of the patent office’s own making. Although the US has provided for patent term adjustment for many years, the provision is new to Canada and Mexico. The USMCA requirement strengthens the provision in NAFTA that made it optional for countries to adopt patent term adjustment regimens, and it echoes the provisions on patent term adjustment contained in the TPP.
Data Protection for Biologic Drugs: Article 20.F.14 of the USMCA obliges the countries to provide at least ten years of data protection (i.e., market exclusivity) for new pharmaceutical products that are or contain a biologic. The agreement defines a biologic as “a product that is produced using biotechnology processes and that is, or, alternatively, contains, a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein, or analogous product, for use in human beings for the prevention, treatment, or cure of a disease or condition.” The USMCA mandate raises significantly the level of protection guaranteed for biologics. NAFTA contained no provision, and the TPP required eight years of protection, or five years plus reliance on “other measures.” The US currently meets the required standard, but Canada, which provides eight years, and Mexico, which provides five for chemicals, fall short.
Pre-Established Damages for Trademark and Copyright Infringement: Article 20.J.4 of the USMCA deals with civil and administrative procedures and remedies for the enforcement of intellectual property rights. With respect to both trademark counterfeiting and copyright infringement, the agreement requires the countries to provide for either “pre-established damages” or “additional damages,” including punitive damages. Article 20.J.4 further requires that pre-established damages be “in an amount sufficient to constitute a deterrent to future infringements and to compensate fully the right holder for the harm caused by the infringement.” NAFTA was silent on the question of pre-established damages, but the TPP included provisions similar to those of the USMCA.
Safe Harbors for ISPs: Article 20.J.11 of the USMCA contains “safe harbor” provisions for internet service providers (ISPs). The provisions call on the countries to establish legal remedies that exempt ISPs from liability for “copyright infringements that [the ISPs] do not control, initiate or direct, and that take place through systems or networks controlled or operated by them or on their behalf.” To qualify for safe harbor protection, the ISPs will have to “expeditiously remove or disable access to material residing on their networks or systems upon obtaining actual knowledge of the copyright infringement or becoming aware of facts or circumstances from which the infringement is apparent.” ISPs are also obliged to terminate the accounts of repeat infringers, but they are not required to affirmatively monitor their services for infringing activity. NAFTA did not cover the question of safe harbors, but the USMCA’s provisions reflect those of the TPP.
These are but a few of the provisions in a chapter that runs 63 pages in length. The response to the USMCA has been predictably mixed, and the agreement still requires ratification by the countries. Its ultimate fate, therefore, is still to be determined.