[Ip-health] EA comments on ACTA submitted to Canadian government

[peter maybarduk]

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[ Picked text/plain from multipart/alternative ]
Essential Action

P.O. Box 19405
Washington, D.C. 20036

July 2, 2009

Consultations and Liaison Division (BSL)
Anti-Counterfeiting Trade Agreement (ACTA)
Foreign Affairs and International Trade Canada
Lester B. Pearson Building
125 Sussex Drive
Ottawa, Ontario
K1A 0G2

Re: Comments of Essential Action on the Proposal for an Anti-
Counterfeiting Trade Agreement

Dear Consultation and Liaisons Division,
Essential Action submits the following comments concerning the
proposed Anti-Counterfeiting Trade Agreement (ACTA).

Essential Action is a project of Essential Information, a non-profit
organization based in Washington, D.C. We are concerned with
protecting the public domain and the information commons. A key
organizational area of focus is promoting global access to medicines.
While we recognize the proposed treaty implicates many other
important issues, our comments focus on the public health priority of
ensuring access to safe and affordable medicines to people around the
world, regardless of income or wealth.

Transparency and stakeholder participation

As a threshold matter, we note ACTA=92s draft text has not been made
public, and the publicly available materials regarding ACTA=92s
proposed subject areas are still thin and too general.  This lack of
transparency and specificity makes meaningful public consultation
difficult, and diminishes the public legitimacy of the proposed
agreement.

This is especially true in light of ACTA=92s misleading name.  While
titularly an =93anti-counterfeiting=94 agreement, ACTA in fact seeks to
=93Establish, among nations committed to strong IPR [intellectual
property rights] protection, a common standard for IPR enforcement to
combat global infringements of IPR, particularly in the context of
counterfeiting and piracy.=94

In the public mind and conventional use, the term =93counterfeiting=94
evokes a very different set of concerns =96 public concerns, including,
for example, the safety of consumer goods =96 than those that can be
most effectively and appropriately addressed though the enforcement
of private rights, including patents, trademarks and copyrights.
ACTA may therefore fail to deliver on the public promise its name
implies.  Simultaneously, ACTA may confer new protections to private
rights holders that could, in fact, come at a public cost.  The
secrecy of the agreement=92s text amplifies this problem of public
misrepresentation.

We understand that Canada has stated, at least informally, that it
favors making the draft ACTA text publicly available. We request
Canada formally and publicly ask its ACTA negotiating partners to
disclose the draft text.  Such a request would help overcome the
problem of negotiating partners insisting they cannot make the text
public because they have promised other negotiating countries that it
would remain secret. We further request negotiations be placed on
hold until a draft text is released.

Additionally, we request Canada formally and publicly support
Brazil=92s participation as a Party to ACTA, and urge ACTA negotiating
parties to open the negotiations to interested developing countries.
As we detail below, ACTA rules will likely have significant impact on
access to medicines in developing countries, because they may
interfere with the legitimate trade in generic medicines, while those
medicines are in transit in ACTA countries. Even more importantly,
ACTA rules may affect developing countries through its potentially
harmful impact on the global supply of legitimate generic medicines.

ACTA=92s potential public costs

Approaching anti-counterfeiting policy through private rights
enforcement comes with several potential, and potentially serious,
public costs.

Global access to medicines depends in large part on market
competition reducing prices over time, to levels where government
treatment programs can scale-up coverage.  Over the last ten years,
global competition and generic medicines have produced a revolution
in HIV/AIDS treatment, for example, reducing prices from $10,000 to
near $100 per person per year, and enabling more than three million
people to access lifesaving antiretroviral therapy.

The ACTA Key Elements Under Discussion[1] concerning injunctions,
border measures, criminal penalties and enforcement practices suggest
the Agreement may facilitate policies that obstruct and deter
legitimate generic competition.  For example, in several recent
incidents, customs authorities in Europe have wrongly detained
generic medicines in transit to developing countries, on suspicion of
patent or trademark infringement. The medicines were in transit, and
did not jeopardize private rights in the country through which they
passed.  But their detention did disrupt drug procurement in
destination countries where, in at least some cases, the medicines
were not even on patent.  Problems already evident in the European
Union could be considerably worsened by ACTA proposals =96 both binding
standards as well as non-binding norms =96 enabling abuse by rights
holders, and chilling investments in the generics trade over time,
particularly if appropriate safeguards are not put into place.

Many of the Key Elements Under Discussion could enable policies
restricting the availability and free movement of generic medicines.

ACTA could legitimize seizing in-transit medicines for alleged rights
infringements in the transit country, even though such infringements
in no way threaten the rights holder=92s protected market, because they
are merely passing through.
ACTA may grant customs officials broad authority to seize medicines
ex officio =96 on their own authority =96 even though customs officials
are poorly suited to analyze issues related to intellectual property
infringements.
ACTA may grant rights holders broad authority to trigger detentions,
and to keep allegedly infringing goods out of circulation, proposals
that clearly open the door to spurious infringement claims and abuse.
ACTA may also pile on deterrents against shipping generic medicines
that could infringe a trademark or patent in a transit country, even
when the products infringe no rights in their port of origin or
destination.

For example, the Elements Under Discussion contemplate assigning
storage fees for detained medicines and legal fees to the alleged
infringer.
It is possible little evidence will be required to trigger
detentions, or to support them after the fact.
ACTA seeks to facilitate the development of public international
enforcement networks for private right monopolies, consisting in part
of law enforcement officials across the globe who may advise and
prepare their colleagues in other countries to stop incoming
shipments of generic medicines.
More broadly, ACTA contemplates enforcement norms of exceptional
reach that would alter existing balances of rights and liability.

Under the World Trade Organization=92s Agreement on Trade Related
Aspects of Intellectual Property (TRIPS) Article 44.2, countries are
not required to make injunctive relief =96 legal orders to stop rights
infringement =96 available in all circumstances, because other
important national interests, such as keeping health products on the
market, could be compromised. (Rights holders can still sue for money
damages.) Leaked ACTA draft texts suggest the Agreement may eliminate
this important flexibility.   Among other harmful effects, this could
enable many more detentions and seizures of generic medicines.
ACTA could legitimize norms favoring widely available injunctive
relief for alleged patent infringement, including detentions and
seizures of medicines, even though patent status is not reasonably
related to drug quality concerns (described in the next section), and
generics do not mislead consumers.
[PU1]Criminal penalties and damages could be applied too broadly and
bluntly, intimidating generics manufacturers (particularly in light
of customs officials=92 inaccurate infringement assessments, and
defendants=92 limited recourse to counter infringement claims) and
chilling the trade.
Perhaps even more concerning, Article 2.4 of a leaked ACTA draft text
states each Party shall provide judges the authority to order alleged
infringers to identify third persons in the production chain, such as
manufacturers of active pharmaceutical ingredients (APIs) that
contract with generics firms.  It is possible liability could attach
to such contractors, as well (for example, if they knew or had reason
to know the medicines might infringe a patent or trademark, somewhere
in the world, even at some point of transit).  Under such rules, API
manufacturers might reason that contracting with generics firms has
become too financially risky, and leads to undue invasive scrutiny of
their business, and the supply of APIs to generics could dry up.
This would undermine generic medicines worldwide.

Perhaps less severe versions of some of these Elements are under
consideration.  But any of these Elements could obstruct generic
competition.  Taken together, they would enact a very dangerous and
poorly conceived enforcement environment, posing a deeply serious
threat to global access to medicines.

Notably, the Elements Under Discussion do not adequately contemplate
important safeguards.  These should include, at a minimum and among
others, explicitly rejecting patent infringement as a detention
trigger, excluding all in-transit medicines from rights-based
detentions, adequate procedural protections and provisions for the
rights of alleged infringers to be heard, and robust anti-abuse and
liability provisions adequate to deter wrongful detentions.

Essential Action is very concerned with the Elements Under
Discussion, and urges a deeper analysis and public consultation
process regarding their likely effects on global access to medicines.

ACTA may impose another quite literal cost on the public.  Although
public laws provide for patent, trademark and copyright protection,
it is generally the responsibility of private parties to identify
alleged infringements and bring suit.  The broad enforcement measures
contemplated in ACTA shift the burden of private rights enforcement
to the public. This capture of public means for private ends is not
only tangential to the legitimate public goals of protecting
consumers from unsafe and ineffective products, it may also come at
significant financial cost to taxpayers, and divert considerable law
enforcement resources from other priorities.  A shift in enforcement
responsibility implies a change in the very nature of these private
rights.  It is a potentially major policy shift that should, at a
minimum, be subject to serious deliberation in the legislatures of
the ACTA Parties.

A third possible public cost relates to innovation incentives and
barriers to product development.  As Knowledge Ecology International
points out,[2] damages rules that enable dramatically increased
penalties for infringement and increased availability of injunctive
relief, both contemplated in the Elements Under Discussion, could
actually hurt innovation, rather than help it.  This is because
companies developing complex, patent-rich technologies or
copyrightable software sometimes infringe, willfully or unwillfully,
intellectual property rights in the process.  High rents and absolute
bars on infringement can make it much more costly, or legally
impermissible, to bring these products to market.  But sometimes, it
is important that infringing technologies reach market.  For example,
developers of new drug diagnostics might overlook a claimed patent or
fail to reach a licensing agreement with a patent holder.
Injunctions or excessive damages could keep such critical new
technologies off the market, or (perhaps more likely) make them more
expensive for consumers.   Health technologies, especially those
developed to treat diseases endemic in poorer countries, are very
cost sensitive.  If a technology is not cost effective for under-
resourced health programs, it might never reach the people it was
designed to serve.

ACTA=92s present inadequacy to address public safety

First among the public benefits ACTA advertises in its materials is
protecting public health and safety from dangerous counterfeit
goods.  But intellectual property enforcement is a crude, overly
broad and under effective tool for protecting these interests.  There
are more effective and narrowly tailored policies that could be put
in place to protect the public from dangerous goods, including
substandard medicines =96 without risking anti-competitive effects.

The Elements Under Discussion do not exclude patent infringement from
ACTA=92s broad reach.  But patent infringement analysis is not
reasonably related to counterfeiting or drug quality concerns.  The
required analyses are entirely separate; one pertaining to alleged
use of claimed proprietary inventions, the others to deliberate
mislabeling and detailed assessments of drug safety and efficacy.
Even a proven patent infringement is no basis for classifying a
medicine (or any other product) as counterfeit, under either the
TRIPS or World Health Organization definition.  Generics are not
categorically less safe than branded medicines.  Rather than
protecting public health, targeting generics through overly
aggressive patent enforcement measures, especially without adequate
anti-abuse provisions, obstructs competition and could jeopardize
access to medicines.

In intellectual property usage, the term counterfeit, as regards
medicine, correctly applies only to trademark infringement.  But even
in the trademark context, only a subset of infringing medicines (or
other goods) pose a risk to public health.  These include
deliberately mislabeled medicines, which fraudulently misrepresent
their source or ingredients to consumers.   Generic medicines (or
other goods) unintentionally bearing symbols or words that could be
confused with trademarks cannot be said to pose such a categorical risk.

For this reason, trademark analysis and trademark enforcement is not
necessary, and probably not even beneficial, to protecting the drug
supply, given that there are better available alternative policies.
A better policy would specifically target  fraudulent and
deliberately mislabeled drugs =96 irrespective of trademark or any
other intellectual property issues.  This is indeed a serious public
priority.

The possibility of catching some intentionally mislabeled medicines
in trademark's large net may not justify the risk overbroad
enforcement policies could pose for access to medicines, given,
again, there are more rational and narrowly tailored alternatives.
Further, the evidence shows that customs officials overzealously
detain medicines that do not, in the end analysis, infringe
trademarks.   Thus, trademark's net is probably even larger and less
precise in practice than it is in theory.  This means an even greater
risk to access to medicines.  These matters require much more
attention and analysis than they have received, before enshrining
overreaching enforcement measures in a new global treaty.

Public policy could better protect public health by focusing on
mislabeled medicines, rather than intellectual property.  For
example, countries could require companies to disclose any
information they have about potentially dangerous mislabeled
medicines on the market.   Private companies often have the first or
most complete accounts of deliberately mislabeled products, but do
not always share what they know.

For example, the Pharmaceutical Security Institute (PSI), formed by
fourteen pharmaceutical companies in 2002, recorded 76 cases of
counterfeiting in 2004.  The U.S. FDA only knew of 58.[3]  Some
consider PSI=92s counterfeiting database the world=92s best, yet it =93is
not accessible to the WHO, health authorities or the public.=94[4]

There are at least two existing proposals for statutory disclosure
requirements.  Cockburn et al. propose a model based on the United
Kingdom Civil Aviation Authority=92s reporting requirements for
suspected unapproved aircraft parts.[5]  Companies would be required
to report suspected deliberately mislabeled medicines to regulatory
agencies.  The agency would then take responsibility for confirming
the report and deciding whether and when to alert law enforcement and
the public.  Meanwhile, U.S. legislation introduced by Representative
Steve Israel proposed requiring drug companies to notify the FDA
within two days of learning of a counterfeit threat.[6]  Countries
could also commit to sharing such information.  Again, disclosure and
notification requirements should include appropriate anti-abuse
provisions.

Other policy priorities for combating dangerous fake medicines should
include strengthening drug regulatory authorities and consumer
protection agencies and developing reliable, impartial empirical data
on the extent of the medical counterfeiting problem (very little
empirical data currently exists), as well as promoting robust
legitimate competition to lower prices. There is broad consensus that
high prices of some goods drive both supply and demand in
counterfeits markets. For example, according to the World Health
Organization, =93When the prices of medicines become excessively high
and unaffordable, patients tend to look for cheaper sources.  Such
situation [sic] encourages counterfeiters to produce cheaper
counterfeit drugs. =85 When price differences exist between identical
products, patients and consumers go for the cheaper ones.  This
creates a greater incentive for counterfeiters to supply cheap
counterfeit medicines.=94 [7]

Principles; Analysis of ACTA costs and benefits

Under the present Elements of Discussion, the Anti-Counterfeiting
Trade Agreement could jeopardize access to medicines, through
potential anti-competitive effects, the obstruction of the generics
trade, and a high likelihood of abuse by rights holders.  At the same
time, its method of protecting public safety =96 aggressive public
enforcement of private intellectual property rights =96 is both over
and under inclusive, and may capture some deliberately mislabeled or
substandard medicines only incidentally, while aiming to protect
pharmaceutical monopolies.  Further, ACTA appears to come at
significant financial cost to taxpayers, who will be asked to bear
the burden of this monopoly enforcement.

There is a critical public interest at stake in the efficient and
secure international passage of lifesaving generic medicines.  Delays
in medicine shipments =96 to say nothing of their permanent seizure and
destruction =96 jeopardize the health of people awaiting the medicines,
primarily in the developing world.  Improper seizures of generics put
the business model for generic medicines at risk =96 with potentially
serious consequences for access to medicines around the globe.

Essential Action urges, at a minimum, the following principles for
any enforcement policies that could affect the international
medicines trade:

All border measure policies must include robust anti-abuse
provisions, including strong liability provisions adequate to deter
wrongful detentions.
Rights enforcement policies must include robust procedural safeguards
and evidentiary standards to protect medicines manufacturers from
costly rights enforcement errors.
Rights enforcement policies must not compromise generic medicine
supply chains.
Detentions of in-transit medicines should be triggered only by case-
specific, legitimate public health concerns =96 not by private rights.
Patent status is clearly an improper proxy for drug quality or
counterfeiting concerns. Patent status should have no role in
decisions to detain or seize medicines, whether in-transit or at
their point of destination.
Trademark violation is not a valid ground for detaining in-transit
medicines. Rather, in-transit medicines should only be detained on
reasonable, case-specific and good faith belief of public
endangerment or fraudulent labeling  (the medicines' packaging
deliberately misrepresents identity, source or contents).
Thank you for this opportunity to provide comments.  Essential Action
is available to discuss any of the aforementioned points in further
detail.

Sincerely,

Peter Maybarduk

Staff Attorney

Essential Action

www.essentialaction.org/access
peter.maybarduk@essentialinformation.org


[1] =93The Anti-Counterfeiting Trade Agreement =96 Summary of Key
Elements Under Discussion,=94 April 6, 2009, available at: http://
www.international.gc.ca/trade-agreements-accords-commerciaux/fo/
intellect_property.aspx?lang=3Den&menu_id=3D7&menu.
[2] =93Damages, Injunctions and Transparency Key Issues in ACTA
Negotiations,=94 James Love, Knowledge Ecology International, June 15,
2009, available at: http://www.keionline.org/blogs/2009/06/15/
thoughts-acta-negotiations/.
[3] =93Counterfeit medicines =96 What are the problems?=94 Pharma-Brief
Special, BUKO Pharma-Kampagne, a member of Health Action
International (2007) at 5.

[4] =93The global threat of counterfeit drugs: why industry and
governments must communicate the dangers.=94  Robert Cockburn, Paul N.
Newton, E. Kyeremateng Agyarko, Dora Akunyili, Nicholas J. White,
Public Library of Science (PLoS) Medicine, April 2005, Volume 2,
Issue 4, at 305.

[5] PLoS, supra at 307.

[6] H.R. 2345, 109th Congress.

[7] =93What encourages counterfeiting of drugs?=94  World Health
Organization Counterfeits FAQ, available at: http://www.who.int/
medicines/services/counterfeit/faqs/16/en/index.html.


  [PU1]Beyond in-transit