The TPP’s Intellectual Property Provisions: The “Worst Public Policy Decision in the Country’s History”? Let’s Have Some Perspective!

Author: Hugh Stephens

The newly negotiated Trans-Pacific Partnership (TPP) that the Liberal Government has inherited from its Conservative predecessors is coming under increasing scrutiny. Among the many areas that will be examined is Chapter 18, where the Intellectual Property (IP) provisions of the Agreement are outlined. (TPP IP Chapter). IP is one of the areas where the anti-TPP forces have focused much of their attention throughout the negotiations, working off leaked texts of early drafts, and assuming the worst. (The Leaked TPP Text: Focus on the Big Issues). Clearly the mistrust continues. According to press reports quoting remarks made last week by Jim Balsillie, former co-CEO of RIM, (Balsillie Fears TPP Could Cost Canada Billions), the Agreement “could cost Canada hundreds of billions of dollars” and become “the worst public policy decision in the country’s history” because of provisions hidden in the IP chapter. Another fervent critic of the TPP’s intellectual property provision, University of Ottawa law professor Michael Geist, claims that Canada has “caved on copyright” (Canada Caves on Copyright). Mr. Balsillie is quoted as saying Canada’s negotiators were “outfoxed”, and “profoundly failed Canadians”.

Wow! Can it really all that bad? Were our negotiators taken to the cleaners? The answer, in short, is “no”. Let’s tone down the rhetoric and measure the accusations that are being levelled against the Agreement against what the text of the IP chapter actually says. Let’s look at what Canada actually committed to, and put the additional commitments that Canada—and the other TPP partners—have made, into a global context.

First, Mr. Balsillie’s reported criticisms. Since I have not spoken to him about what he is reported to have said, I can only go on the basis of the remarks attributed to him published in the Toronto Star, Canadian Press (TPP Rules on Intellectual Property Pulled into Spotlight), the CBC (CBC-Balsillie), and elsewhere.  I recognize that he may have been misquoted, or his comments taken out of context (although Elizabeth May did not seem to think so as she rushed to congratulate him on his views (May-Balsillie). Among other things, Mr. Balsillie is reported to have said that said the deal threatens to make Canada a “permanent underclass” in the economy of selling ideas. This will apparently come about because Canadian innovators will have to play by rules set by the U.S.

It is no secret that the U.S. government is a proponent of stronger IP rules to protect companies that create content and new products, engage in R&D and generally generate wealth through a knowledge-based economy. Given where the U.S. sits on the technology and creativity pecking order, this is fully understandable. The U.S. pushed for rules in the TPP that would benefit an economy based on ideas and research, although given the nature of trade negotiations, the US did not achieve all of its goals, as successive leaks of the IP chapter compared with the final text clearly shows. But even accepting that the outcome strengthens IP protection and investments in innovation, why this would disadvantage Canadian innovators is not immediately apparent. Indeed, much of Blackberry’s value (RIM’s successor) is embodied in its patent portfolio (Bloomberg-Blackberry's Patent Portfolio).

Mr. Balsillie may be influenced in his views by the well-known litigation that occurred in the U.S. between RIM and a company known as NTP, which successfully sued RIM for patent violation. After protracted legal proceedings, RIM in the end settled for just over US$600 million (RIM Settles NTL Case for $612.5 Million). I am not going to comment on the rights and wrongs of this case (NTP has been accused of being a “patent troll” because it had brought none of its patents into production) but it is hard to see how the IP commitments under the TPP are relevant to such a case. Blackberry or other Canadian patent holders could just as easily be the beneficiary of U.S. patent laws and the U.S. courts today if they could prove that any of their patents had been violated.

Mr. Balsillie is reported also as saying that he fears the Agreement “would give American firms an edge and cost Canadian companies more money because they would have to pay for someone else’s ideas instead (of) their own.” On the face of it, this is also hard to understand. If Canadian companies decide to use someone else’s ideas (assuming these ideas are protected by IP laws), one would expect them to compensate the rights holder. If they decide not to use someone else’s ideas, (and do not infringe on the rights of the rights holder) then they are fully free to exploit and develop their own ideas, and get the full protection of the law and the IP provisions of the Agreement from doing so. Mr. Balsillie is also quoted as saying the commitments Canada made “could prevent Canadian firms from growing as it would also limit how much money they can make from their own products and services”. Since the Agreement only strengthens cooperation among the patent authorities of the participating countries, making it easier to file patents and have them recognized, again it is hard to see how Canadian companies developing innovative applications will be disadvantaged.

I have a lot of respect for Mr. Balsillie and his achievements, and I am not sure that I have been able to identify the real source of his concerns, misplaced as I think they are. Based on his comments, I have to assume they deal with the patent regime since it is hard to believe his attack on the Agreement could come from the other provisions in the IP chapter, such as trademark and copyright provisions, since these would seem to be of limited application to his business interests. By the way, the Agreement will strengthen protection in both areas and requires countries that are not yet signatories to the main international treaties that protect intellectual property to accede to them.

But let us look at the copyright provisions since Prof. Geist, another major critic of the deal, has criticized the IP chapter primarily because Canada agreed to extend the term of copyright protection for music, literary works, audio visual productions, etc. from 50 to 70 years. (The clock starts ticking on the period of protection generally from the death of the author although for collective works this is a bit more complicated). The argument against extension is that this measure will keep works out of the public domain for 20 additional years, thus costing consumers more money. According to Prof. Geist, Canada “caved” on this point, resulting in a “massive loss” to the Canadian public domain (Geist-Massive Loss to Canadian Public Domain).  Ensuring the holders of copyright continue to receive royalties for a longer period may possibly transfer some wealth from users to copyright holders, although an EU study showed no actual decrease in prices paid by consumers once works went into the public domain (Canada to Extend Copyright Term for Artists and Record Producers). In fact, it could be argued that putting works in the public domain earlier simply results in a transfer of wealth from creators that invest in new works to those whose only business is in distributing public domain material. While term extension will provide greater value to copyright holders, Canadian creators (or their estates) will obviously benefit from this, as they already do for their works in the U.S. where the copyright term is longer.

When the previous Conservative government extended the term of protection for performers and record producers from 50 to 70 years earlier this year, there was an immediate outcry from the composers and songwriters asking for the same extension (Take Care of Composer, Songwriters and all Authors: SOCAN). In fact, 70 years of copyright protection is the norm for most of the developed world (EU, the U.S., Australia among others) and Canada in this regard had become somewhat of an outlier. There is a valid discussion as to the appropriate balance between incentive and remuneration for creators on the one hand versus potentially lower costs for the public by putting works into the public domain sooner on the other (if in fact that occurs), but certainly the increased incentive of an additional term of protection should be welcome news to the Canadian cultural industry. In any event, admitting that extending copyright term was no doubt a U.S. initiative, this may have been an area where Canada offered something in the IP area in return for U.S. concessions elsewhere. We may never know but Canada can hardly have said to have “caved”, particularly given the benefits for Canadian creators that will come from the extended term of protection.

The best that can be said is that there is a lot of exaggeration about the supposed downsides of the TPP, including its IP provisions. To call it the “worst public policy decision in our history” is, to say the least, hyperbole, but going a step further—it is inaccurate. While there was some give and take in the IP area as in other areas of the Agreement, overall it will be of benefit to Canada including in the area of intellectual property. As a public policy decision, Canada’s participation in the TPP it will probably rank as one of the better things that the Conservative government left as a legacy. I hope it is ratified, in Canada but particularly in the U.S. But this is another story.

Hugh Stephens is a Senior Fellow at the Asia Pacific Foundation of Canada, Executive Fellow at the School of Public Policy at the University of Calgary, a Fellow at the Canadian Global Affairs Institute, and a Senior Analyst at Wikistrat Consulting.

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