Contrasting with apparent progress on some other chapters, which were declared “on track” by negotiators, the Trans-Pacific Partnership Agreement’s intellectual property chapter appears to have stalled in Melbourne. According to some sources, the 10 day negotiation yielded no meaningful progress on the intellectual property chapter. This is as some of the most controversial aspects of the U.S. proposal, including internet service liability and the “May 2007” access to medicines issues, came to the table. The non-US parties in the negotiation appear to have taken a uniform stance against U.S.’s proposal to replace the May 2007 access to medicine policies included in the Peru Free Trad Agreement with its new “access window” (aka “team”) approach requiring TRIPS-plus data exclusivity, linkage and patent extensions.

Reflecting the added problems with achieving agreement on the intellectual property issues, the negotiations on this issue have shifted to a monthly schedule whereas full rounds occur every other month. This has already been the case since the February round in Los Angeles, followed by the full round in Melbourne last week. Sources at the Melbourne round suggested that the monthly schedule for the IP chapter would continue indefinitely.

The highly contentious issues contained in the ACTA-plus intellectual property enforcement proposal of the U.S. are slated for an “intersessional” meeting April 9-13 in Santiago, Chile. The next full round of TPP negotiation has been reported to be scheduled for May 8 to 19. Previous rumors had the meeting taking place in Dallas Texas. But recent reports suggest that the place of the meeting may still not be determined, but is likely yo be in the U.S.

The strong resistance to the U.S. proposal emerged in the context of rising criticism by internet and generic medicine companies. The strong contingents of these companies from the U.S., testifying against the U.S. proposal, left the distinct impression among many that the U.S. trade policy process is not adequately representative of the full range of U.S. interests, even while the USTR defends its consultation process as fully transparent and inclusive.

The generic medicine industry sent an especially large contingent to the Melbourne round. Nine representatives of the generic industry presented their opposition to U.S. backtracking on the 2007 “New Trade Policy for America,” including representatives of companies or associations located in the U.S., Malaysia, Chile and Australia. This was the largest delegation from generic companies sent to a negotiation round thus far, and it clearly made a strong impression with many country delegations. Interestingly, the stakeholder presentations did not include a single presentation from PhRMA or its membership. Indeed, there were no presentations supporting the U.S. “access window” proposal on medicines issues, which would replace the 2007 New Trade Policy provisions on data exclusivity, patent-registration linkage and patent term extensions.

[USTR has removed pages explaining the 2007 policy from its website. See Office of the United States Trade Representative, Bipartisan Agreement on Trade Policy: Intellectual Property Provisions, May 11, 2007, http://www.ustr.gov/assets/Document_Library/Fact_Sheets/2007/asset_upload_file312_11283.pdf.]

Generic firms gave an especially forceful criticism of the policy implications of exporting U.S.-style “linkage” provisions to the TPP region. Such policies, modeled on the Hatch-Waxman Act in the U.S., incentivize generic firms to challenge wrongfully granted patents through a complex carrot and stick approach. The carrot is a six months period of generic exclusivity for an effective challenge, giving the successful challenger a windfall to help pay for litigation expenses and other costs of market entry. The stick is a requirement that the registration officials stay the registration of any medicines for which a patent is claimed, in effect forcing the generic firm to sue the patent holder for market entry (without linkage, it would be up to the patent holder to decide whether to sue the generic, which it could refuse to deal if it believed its patents were weak). The problem with this policy for TPP countries, according to economic analysis performed in Australia, is that the markets outside of the U.S. are far too small to make the benefit of market exclusivity outweigh the costs of litigation. Linkage policies, in these countries, would be all stick and no carrot, leading generic firms to leave erroneously granted patents blocking the market.

This was a compelling example of the kind of analysis that should be done before offering, much less implementing, U.S. crafted policies in other countries. Among IP academics, there is a growing consensus that one size should not fit all. Evidence should guide policy making, particularly when U.S. policies are attempted to be exported to countries that have little similarity to U.S. markets.

The Melbourne round also featured new testimony from the World Information Technology and Services Alliance (WITSA), which represents internet and technology companies in the TPP region. WITSA’s Tim Conway criticized the lack of transparency in the agreement, reporting that only three of WITSA’s 13 TPP member country associations had been consulted on the TPP’s copyright and internet enforcement provisions that would directly affect them. Additional criticisms of the agreement’s lack of transparency were made by civil society organizations in a letter released last week, as well as from Senator Wyden in questioning of USTR Kirk before a senate subcommittee.

One big lurking question for the TPP IP chapter is whether the U.S. will continue to push the most extreme and controversial components as the presidential election unfolds, and whether the net-roots activists and other campaigners will use the election to challenge President Obama on this policy. The only pro-U.S. proposal organization to testify on the IP chapter at the stakeholder session was the U.S. Chamber of Commerce – whose short presentation was primarily around the theme that the U.S. IP proposal is not guided by the recently failed SOPA legislation in the U.S. (This was a theme directly counter to the presentation of the Computers & Communication Industry Association’s Jonathan Band, who explained that, although the precise language of SOPA and TPP differ, the basic tools being used, the primary of which is ISP liability – are indeed the same). This “don’t get SOPA’d” theme has become a dominant refrain in American political discourse on technology issues. But the Administration should be caring as much about the risk of getting ACTA’d as protests against that agreement, a clear model for some of TPP, continue to take the streets in Europe. The Chamber of Commerce showed no such concern, calling ACTA a “best practices model” that should guide the IP-enforcement text of the TPP.

Next month’s negotiation in Santiago will likely determine whether this agreement will accept the ACTA model and the politics it will likely bring with it. This as ACTA’s biggest EU proponent, Karel De Gucht, the European Commissioner driving ACTA, is now admitting that the agreement may be doomed in Europe.

A second important question is whether the TPP will and should survive as the primary forum for the harmonization of IP rules in the region. A very different discussion is occurring through the Intellectual Property Rights Experts Group of Asia-Pacific Economic Cooperation (APEC). That discussion, which notable includes China and which will includes a workshop in Chile soon, is focused on limitations and exceptions in the region. That discussion appears much better aligned to the interests of innovation, development and the promotion of public interests in the region.

[Note: This article was updated at 9pm est to reflect that the dates and place of the Santiago, Chile Meeting April 9-13 have been confirmed.].