Next week, PIJIP Fellows Bijan Madhani and Michael Vasquez and I will be releasing our study for the EU parliament on the impact of ACTA on access to medicines in developing countries. A draft of the paper was released last month. Given that the agreement is being signed by some countries Saturday, I thought I would release a summary of our findings now.

On the whole, what appears clear is that, through a highly secretive process, ACTA negotiators created an agreement that shifts international “hard law” rules and “soft law” encouragements toward the interests of intellectual property rights holders. It makes enforcement of intellectual property rights in courts, at borders, by the government and by private parties easier, less costly, and more “deterrent” in the level of penalties. In doing so, it increases the risks and consequences of wrongful searches, seizures, lawsuits and other enforcement actions against legitimate suppliers of generic medicines. This will, in turn, make the global legal environment less hospitable to the promotion of access to affordable medicines around the world.

The ACTA process and substance is counter to two sets of specific instructions contained in European Parliament resolutions and supported by international human rights law: (1) that processes for international law making impacting access to medicines and other important social interests be open and transparent and participatory, and (2) trade agreements with developing nations not include “TRIPS-plus” measures that restrict the global trade in affordable medicines. Each of these points is explained in more detail below, and in much more detail in the 100+ page final paper to be released next week.

ACTA’s Process did not Comply with EU Parliament Mandates on Transparency and Stakeholder Participation

The problem that ACTA poses for access to medicines and other public interest concerns begins with its process.

ACTA was negotiated through a secretive process common for bilateral tariff agreements that concern a narrow group of commercial interests. But ACTA does not reduce tariffs or regulate trade in any traditional sense. ACTA is a sweeping legal framework minimum standards agreement that requires or prevents changes in domestic legislation that affects a broad range of consumers and patients. Indeed it applies to the regulation of each country’s own citizens whether or not any trade is affected by the regulation. Unlike in multilateral institutions where similar agreements are sometimes crafted, including WIPO and the WTO, ACTA did not afford basic public participation resources. Ongoing releases of negotiation texts and background materials, institutionalized and regular briefings of civil society and the general public and public access to the negotiation venue were all absent. The process was so secretive that that the location and time of negotiations was often kept from public view until mere hours before their start.

Using secretive processes to create broad ranging norms that impact public health implicates international human rights dictates. The rights-based approach to health policy places at its core the promotion of public participation in policy making, along with the promotion of equality and non-discrimination. Promoting broad public participation as a human right, including participation by public health experts and advocates, is especially important in the promulgation of technical international standards restricting domestic regulation in fields in which trade negotiators have little expertise and for which industry interests are at odds with more diffuse consumer and public health needs.

Using a secretive process to negotiate ACTA was also counter to specific European Parliament demands. As detailed in the chart below, the March 2010 EU Parliament resolution on ACTA contains at least nine specific demands for transparency and open process that were not complied with.

European Parliament Resolution March 2010 ACTA Process (post-resolution) 2. Expresses its concern over the lack of a transparent process in the conduct of the ACTA negotiations, a state of affairs at odds with the letter and spirit of the TFEU [Treaty on the Functioning of the European Union]; Process not dramatically improved. No Public hearings held on draft text. Public health representatives continue to be consulted only in closed door sessions with no access to text. is deeply concerned that no legal base was established before the start of the ACTA negotiations and that parliamentary approval for the negotiating mandate was not sought; No legal base established before conclusion of ACTA negotiations. 3. Calls on the Commission and the Council to grant public and parliamentary access to ACTA negotiation texts and summaries, in accordance with the Treaty and with Regulation (EC) No 1049/2001 of 30 May 2001 regarding public access to European Parliament, Council and Commission documents; One public release of draft negotiating text in April 2010. Parliament given ongoing access to negotiating drafts after April, but public is not given similar access.# 4. Calls on the Commission and the Council to engage proactively with ACTA negotiation partners to rule out any further negotiations which are confidential as a matter of course and to inform Parliament fully and in a timely manner about its initiatives in this regard; expects the Commission to make proposals prior to the next negotiation round in New Zealand in April 2010, to demand that the issue of transparency is put on the agenda of that meeting and to refer the outcome of the negotiation round to Parliament immediately following its conclusion; Whether the Commission in fact pressured other partners to increase transparency is unknown because all negotiation venues and positions remained secret through the finalization of text in December 2011. Rounds of negotiations continued to be held in locations that were undisclosed until hours before their formal start. 5. Stresses that, unless Parliament is immediately and fully informed at all stages of the negotiations, it reserves its right to take suitable action, including bringing a case before the Court of Justice in order to safeguard its prerogatives; After the resolution, the European Parliament’s International Trade Committee (INTA) was given access to negotiating text, but under rules prohibiting the sharing of text with uncleared constituents stakeholders.# The Commission is now being sued by one MEP for a failure to meet Parliament’s demands.# 6. Deplores the calculated choice of the parties not to negotiate through well-established international bodies, such as WIPO and WTO, which have established frameworks for public information and consultation; ACTA was not moved to a multilateral forum. 8. Welcomes affirmations by the Commission that any ACTA agreement will be limited to the enforcement of existing IPRs, with no prejudice for the development of substantive IP law in the European Union” In the end, as discussed below, ACTA limits the ability to develop limitations and exceptions to intellectual property rights enforcement, thereby impacting the practical reach of intellectual property rights. 9. Calls on the Commission to continue the negotiations on ACTA and limit them to the existing European IPR enforcement system against counterfeiting; EU academic analysis indicates that ACTA indeed goes beyond the acquis communautaire.# considers that further ACTA negotiations should include a larger number of developing and emerging countries, with a view to reaching a possible multilateral level of negotiation; No more developing countries are added to the negotiation. Despite the proclaimed intent to make ACTA a new global standard,# only two of the 37 negotiating countries, Morocco and Mexico, were developing countries.

ACTA Does Not Comply with Parliament Orders to Exclude TRIPS-plus Provisions for Medicines

Following uses of TRIPS by some companies and countries to challenge access to medicine policies in Brazil, South Africa and other developing countries in the mid 1990s, a body of legal norms emerged that are critical of measures to heighten intellectual property for medicines in developing countries beyond the plain meaning of TRIPS minimum standards (referred to as “TRIPS-plus”).

Internationally, the 2001 Doha Declaration on TRIPS and Public Health unanimously affirmed that TRIPS “should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all,” and reaffirmed “the right of WTO members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.” Avoiding TRIPS-plus standards in trade agreements on medicines issues has also been recognized as an international human rights duty.

In furtherance of the Doha Declaration and international human rights and development policy concerns, the European Parliament has repeatedly enjoined the Commission from negotiating TRIPS-plus provisions on medicines for developing countries.

ACTA does not comply with these mandates. The danger begins in ACTA’s operative definition of counterfeit trademark goods. Counterfeit trademark goods under ACTA comprise a category so imprecise that legitimate generic medicines might easily be determined to be infringing. The most likely rationale for actionable trademark confusion is a result of the fact that both brand name and generic medicines must display the drug’s international non-proprietary name (“INN”) for the active ingredient.# In addition, both the generic and original manufacturers of the drugs could use portions of the drugs non-proprietary name in their branding, while also using similar trade dress to ensure consistency and bioequivalence for consumers. These necessarily similar factors might be perceived as confusing and therefore infringing, given the low standards present in ACTA. Once generic drugs are suspected or determined to have infringed on an intellectual property right, those involved in their production and distribution are subject to a host of enforcement provisions, which are of equal concern.

There are at least 18 specific provisions of ACTA that require or encourage member countries to raise intellectual property enforcement standards on medicines, including those destined for developing countries. These concerns are described in more detail below.

BORDER MEASURES

One of ACTA’s most serious threats to access to medicines comes from the raising of TRIPS requirements for border seizures of suspected products. TRIPS mandates that member states put in place border procedures to seize suspected counterfeit trademark and copyright pirated goods in response to prima facie evidence from the right holder, and allows but does not require ex officio restraints of imports. ACTA:

expands the scope of coverage to all intellectual property infringement grounds except patent and data protection,

mandates ex officio suspension procedures for exports and imports,

allows seizures of goods in-transit between two countries where neither countries’ laws are violated,

eliminates the requirement of a prima facie evidence determination for ex-officio suspensions.

The border provisions were some of the most controversial aspects of ACTA. The controversies were triggered by a series of wrongful uses of border measures in the EU to detain lawful shipments of generics to and from developing countries, now generally referred to as the “Dutch Seizures.” The dispute started with the Netherlands applying a “manufacturing fiction” that permitted drugs being shipped through their customs to be seized for violating Netherlands patent law, even if there was no patent on the drug in the manufacturing or ultimate destination countries. Both India and Brazil, as representatives of the manufacturing and destination countries, noted in statements to the TRIPS Council that these seizures ran contrary to the principles of the Doha Declaration on TRIPS and Public Health.

In recognition of the abusive nature of the Dutch Seizure cases, negotiators exempted patents from application of the Border Measures sections. But medicines are also subject to trademark rules and medicines were wrongfully detained elsewhere in Europe on trademark grounds.

ACTA’s dramatic expansion of border measure requirements, including where border agents “suspect” a label of being “confusingly similar” to a brand, will increase the risk of border seizures of legitimate medicines. The lowering of minimum standards for procedural rights and evidence before seizures may also implicate international and European human rights norms governing fair trials and takings of property.

INJUNCTIONS AND PROVISIONAL MEASURES

ACTA expands injunction and provisional measures requirements for member countries to stop the flow of goods within and beyond their borders, even with no determination of an intellectual property violation. ACTA provisions:

allow extra-territorial measures to goods and parties outside the territory over goods destined for a third-party country. TRIPS instead permits equitable relief solely with respect to goods entering the channels of commerce within a country’s jurisdictional territory. ACTA might thus apply in countries of production and export and to create barriers for the flow of goods in-transit.

extend injunction authority to “suspect” goods, rather than goods for which any determination of infringement has been made. ACTA thus lowers the evidentiary threshold under which medicines and other goods may be subject to provisional orders interrupting supply.

apply ACTA injunction requirements to patents, unless expressly exempted by an individual country.

Together, these expansions of authority require all member countries to put in place the basic legal elements that were used in the “Dutch seizures.” They enable authorities in one country issue injunctions preventing goods from entering commerce in a third country without that third country’s officials ever passing on whether the item would infringe its own laws. Because medicines contain trademarks as well as patents, merely eliminating all application of ACTA provisions to patents will not solve its problems for access to medicines.

THIRD-PARTY LIABILITY

ACTA expands enforcement activities not only to parties who infringe, but also to so-called “third-parties.” ACTA allows provisional measures (preliminary injunctions) against third-parties to prevent an infringement from occurring and allows provisional measures and injunctions against them to prevent goods that infringe an IP right from entering into the channels of commerce. Not only is there extra-territoriality with respect to relevant channels of commerce, the application of the term third-parties is potentially very broad indeed. It is meant to cover the concept of Internet service intermediaries, but in the pharmaceutical context it might apply not only to distributors and shippers, but to procurement agents and component suppliers as well. Accordingly, third-party enforcement, requiring only a minimal level of suspicion at the provisional measures stage, might deter multiple actors involved in the supply, manufacture, and global distribution of generic medicines.

DAMAGES

The ACTA provision on damages expands TRIPS requirements by delineating specific measures of damages that each member’s authorities “shall consider.” The measures suggested by ACTA, including lost profits and the “market price” or “suggested retail price” of a branded product, are highly inappropriate for developing countries. This provision would apply to every trademark infringement action on a challenged label and applies permissibly to patent litigation. In a world where brand holders traditionally offer no discounts to developing countries for high priced medicines, setting damages for intellectual property violations based on these factors rewards exclusionary pricing and over-deters generic entry to the detriment of access to medicines concerns.

INFORMATION DISCLOSURE

ACTA expands requirements to authorize disclosures of information to rights holders. ACTA includes new obligations beyond TRIPS that:

require disclosure of information about “alleged,” rather than proven, infringers;

remove a TRIPS safeguard that countries need not grant such authority if it “would be out of proportion to the seriousness of the infringement”; and

extendr the duty to include a much broader range of information, including that “regarding any person involved in any aspect of the infringement or alleged infringement,” and “regarding the means of production or the channels of distribution of the infringing or allegedly infringing goods or services.”

In practical effect, the provisions could be used by right holders to discover details on distribution chains of generic companies and mount aggressive and expensive litigation against suppliers and intermediaries to deter generic entry into key markets.

CRIMINAL OFFENSES

ACTA expands the definition of criminal offences for trademark infringement by shifting the intent standard from the intentional counterfeiting of a mark (the TRIPS standard) to the intentional importation and use of the good containing a counterfeited mark. At least in plain language, one could meet the ACTA definition of a crime by intentionally importing a good with a counterfeit label, even if that person did not intentionally create or use the counterfeit label itself. This potentially greatly expands the number of cases of trademark misuse that could be considered criminal, thus raising the (over-)deterrent effect of trademark law for importers, including those of generic medicines.

SEIZURE AND DESTRUCTION OF GOODS

ACTA requires that, “except in exceptional circumstances,” all infringing goods be “disposed of outside the channels of commerce,” while TRIPS required similar treatment only for counterfeit goods. ACTA could be interpreted to require that, for example, absent “exceptional circumstances,” a medicine found to have a minor trademark infringement on a label be destroyed rather than re-labeled and re-sold.

ACTA also expands criminal seizures from being a remedy for proven violations of criminal law to require seizures of “suspected” violations. This expansion may have the effect of leading to more seizures of legitimate medicines, particularly when coupled with the expansion of criminal liability discussed above.