[Ip-health] Handout on US-Singapore FTA restrictions on compulsory licensing

[Mike Palmedo]

This is one of two handout that was presented in the Senate Finance
Committee Hearing on U.S. trade policy.


THE PROPOSED U.S. =96 SINGAPORE FREE TRADE AGREEMENT RESTRICTIONS ON THE
  USE OF COMPULSORY LICENSING WILL HARM US CONSUMERS AND US INDUSTRY

                    Consumer Project on Technology
                             March 5, 2003

The United States/Singapore Free Trade Agreement currently under
negotiation has not yet been made available to the general public.
However, Advisory Committees have had the opportunity to review the
draft and make public comments on it.  According to the report of the
Industry Functional Advisory Committee on Intellectual Property Rights
(IFAC-3), released on February 28, 2003 and available electronically on
the U.S. Trade Representative=92s website, the working text of this free
trade agreement =93sets out the highest standards of protection and
enforcement for intellectual property yet achieved in a bilateral or
multilateral instrument, treaty or convention.=94  The IFAC-3 report
lists the following specific limitations the text will place on the
U.S. and Singapore=92s rights to issue compulsory licenses for patents:

     The Singapore FTA imposes restrictions on a country=92s authority to
     grant compulsorylicenses to situations that are needed to remedy
     anti-trust violations, national emergencies or other circumstances
     of extreme urgency, and for public non-commercial use. With
     respect to cases of public non-commercial use or in the case of a
     national emergency or other circumstances of extreme urgency, the
     FTA specifies that such unauthorized use is to be limited to use
     by the government or third parties authorized by the government;
     that the patent owner is provided with reasonable and entire
     compensation for such use and manufacture; and that Singapore
     shall not require the patent owner to transfer undisclosed
     information or technical "know how" related to the patented
     invention that had been subjected to the involuntary use
     authorization.

This is a standard that appears to go far beyond the WTO or NAFTA rules
on patents, and it will hamstring US policy makers at a key moment in
time, as countries throughout the world seek to address abuses of
patents in a wide range of areas -- medicines, diagnostic tests, clean
fuel, business methods, software and Internet technologies, etc.

Nearly every industrialized country outside of the US has a general
authority to grant compulsory licenses on general public interest
grounds, and many have argued that the US needs to add this general
authority to our patent laws to deal with the escalating evidence that
abuses of patent rights are widespread and growing, creating problems
in controlling costs for new medicines, addressing access to research
tools, managing the development of new standards in the software and
internet area, or for addressing problems such as the Unocal patent on
clean fuel.

The Singapore agreement also appears to outlaw technology specific
compulsory licensing statutes, such the US Clean Air Act,  (42 USC
Section 7608:  Air Pollution Prevention and Control =96 General
Provisions - Mandatory licensing), or our compulsory licensing statutes
for civilian atomic energy  (42 USC Section 2183), and one would also
want to see how it may impact our laws on patents on black lung disease
(30 USC Section  937: Mine Safety and Health =96 Contracts and Grants) or
the Bayh Dole Act (35 USC Section 203:  Patent Rights in Inventions
Made with Federal Assistance).

Singapore rules for compensation in compulsory licensees

Also troubling are the reported restrictions on methods of determining
adequate compensation under compulsory licensing of patents.  In the
copyright field, the US government has wide latitude to set
compensation for compulsory licenses in a manner that promotes the
public interest.  This should also be the case for patents (the recent
memory of the Anthrax case and US efforts to address the pricing of
CIPRO should be recalled).


Deficiencies of the IFAC-3 membership

Finally, it should be noted that USTR refuses to include consumer
interests on IFAC-3, the advisory board for intellectual property trade
matters, which is partly responsibility for the tendency to promote
such anti-consumer trade policy on matters concerning intellectual
property.  Note here also that US consumers presently pay more than
$180 billion for pharmaceutical drugs, often lack access to the newest
life saving medicines, and have an important stake in the global rules
on patents.

For more information: http://www.cptech.org/ip/health/cl/
Consumer Project on Technology  +1.202.387.8030


--
Mike Palmedo
Consumer Project on Technology
T-202-387-8030
F-202-234-5176
mpalmedo@cptech.org