Going Trans-Pacific: Part III

In my past two columns, I focused on the importance of international trade to a small economy such as Canada’s (relative to our large trading partners, such as the US, the EU and China), and then specifically the usefulness to Canadian business of the Trans-Pacific Partnership Agreement’s e-commerce provisions. Today, I turn to one of the more apparently controversial aspects of the TPP — namely its chapter dealing with intellectual property rights. I use the word “apparently” because, while some commentators consider the ...
Going Trans-Pacific: Part III
George Takach, McCarthy Tétrault LLP

 

 

In my past two columns, I focused on the importance of international trade to a small economy such as Canada’s (relative to our large trading partners, such as the US, the EU and China), and then specifically the usefulness to Canadian business of the Trans-Pacific Partnership Agreement’s e-commerce provisions. Today, I turn to one of the more apparently controversial aspects of the TPP — namely its chapter dealing with intellectual property rights.

I use the word “apparently” because, while some commentators consider the TPP’s IP chapter to be unfavourable to Canada, others do not, and I count myself in the latter camp. If you have 30 minutes, I encourage you to actually find chapter 18 of the TPP agreement online and read it, so you can decide for yourself. In the meantime, here are my thoughts.
FACT VS. FICTION

Several Canadian critics of the TPP’s intellecutal property rules have argued that adoption of this trade agreement by our government would tie us to an innovation-killing legal regime; that the only winners from the secretive TPP negotiations are the Americans. The hyperbole used by these critics is surprising, because a measured reading of the TPP’s IP provisions results in a much more balanced conclusion.

The TPP’s chapter 18, which deals with IP, is 74 pages long. And for the most part, this lengthy chapter simply confirms for all countries that sign the TPP the IP regime that has long existed in Canada. For example, the TPP confirms that each party has to have, or adopt, trademark, patent and copyright regimes along the lines that exist today in Canada. Put another way, Canada, the US and the other more developed countries in the TPP will not have to do much to harmonize their domestic IP rules to those of the TPP; rather, the impact of the TPP’s IP chapter is to make sure that the less developed economies within the trade arrangement bring their IP rules up to the standards that are familiar to those of us in Canada, as this will help facilitate trade between the signatories to the TPP. This is an entirely laudable result from the TPP negotiations. And it has to be remembered — the TPP is a trade agreement, not an IP agreement.


FROM RULES TO ENFORCEMENT

Over the years, I have had a number of Canadian clients in the software space who have done business in Asia, and they have bemoaned the lack of effective enforcement of their IP rights in those jurisdictions. The intent of the TPP is to change this situation.

The TPP recognizes that it’s not enough to have black-letter laws on the books setting out IP protection in the trademark, patent and copyright areas, if at the end of the day there is not an adequate enforcement mechanism backing up those substantive rules. As the old legal maxim puts it, there are no rights without remedies. Therefore, the TPP outlines the procedures, remedies and penalties that each party is to implement in order to back up IP rights for civil, criminal and administrative matters. And this is a good thing.

The TPP also requires each country to have an appropriate dispute-settlement process for domain-name conflicts, one generally modelled on policies of the Internet Corporation for Assigned Names and Numbers (ICANN). Canada already has such a dispute-resolution mechanism related to its “.ca” domain-name system, but a number of lesser developed countries do not — so again, this will assist Canadian companies in effectively navigating the shoals of IP around the world (in the case of the TPP, primarily in Southeast Asia).


FIXING THE STEWART DECISION

There are a few areas where the TPP will cause a change in the legal landscape in Canada. One involves the introduction of a general criminal sanction for trade secret theft. Several decades ago, the Supreme Court of Canada in R. v. Stewart held that theft of a trade secret is not actionable as a criminal matter (i.e., that a trade secret owner’s legal remedy would be limited to a civil proceeding).

In delivering this conclusion, the Supreme Court stated that if Parliament wanted the Criminal Code to cover the theft of trade secrets, Parliament could amend Canada’s criminal law, but that the court would not do that implicitly. And for some 30 years, Parliament has refused to act on this challenge in a general context, though it has passed changes making the theft of data and other computer-based infractions criminal offenses, and more recently has criminalized so-called international industrial espionage, where someone acting on behalf of another national government obtains or communicates a trade secret without authorization.

Infringement or theft of intellectual property in Canada can be committed in different ways – know more about them in this article.

With this latter change to the Criminal Code, the irony arises that, if someone steals your trade secret formula to cure cancer (which you developed in Canada), they get off scot-free (from a criminal law perspective) if they are acting for a foreign or domestic corporate competitor of yours — but are guilty if they are acting under the orders of a foreign government. This inconsistency should be corrected in Canada, and the TPP does just that.

Some have argued that this change to Canada’s trade secret law will suppress innovation. In the US, however, the individual states have criminal trade secret laws, and innovation in that country has not ceased — indeed, by virtually all measures, the US remains the most innovative country on the face of the planet. These criminal provisions are reserved for the most egregious, blatant acts of trade secret theft, suitably termed “industrial espionage.”

Material industrial espionage does not happen that often, but when it does, it is useful to have government-sanctioned criminal law – and the enforcement resources of police and the public prosecution service – available to defend against and deter such adverse behaviour.


A LONGER COPYRIGHT TERM

Under the TPP, the term of copyright protection would change in Canada. Today, a copyright lasts for the length of the author’s life, plus 50 years. This rule has been in effect for a very long time, and reflects the original rationale of the copyright legal regime to extend the benefits of an author’s copyright (by being able to charge and collect royalties) to the author and his or her children and grandchildren (i.e., to two generations beyond the author).

In the United States, for some time now, it was recognized that, with people in developed economies living much longer today than even a hundred years ago, the attendant traditional copyright-protection period would expire before the second generation could fully enjoy its fruits. Therefore, a further 20 years was added to the term of protection, such that today, in the US, a copyright exists for the life of the author plus 70 years. And it is this term of copyright protection that has been enshrined in the TPP.

Therefore, by ratifying the TPP, Canada will adopt this additional 20 years of copyright protection. Overall, this is not very material in the scheme of things.


MODEST PATENT TERM EXTENSION

The duration of a patent (roughly 20 years) is also modified by the TPP, but only if the time it takes the applicable patent office to review, process and issue the patent is unreasonably lengthy. This is sensible.

It essentially means that if a government is being unjustifiably slow in processing a particular patent application, this will not work against the patent holder by unfairly reducing the term of protection afforded by the resulting patent. This rule change will serve to level the playing field for all patent holders, so that no country “benefits” by having a slow or inefficient patent office.


EXEMPTIONS ENSHRINED

It is important to understand that, while owners of intellectual property benefit from TPP provisions regarding trade secrets, copyright and patent improvements, the TPP also contains counterbalancing provisions that reinforce users rights.

Consider, for example, article 18.06, entitled “Balance in Copyright and Related Rights Systems,” which provides that each signatory country “endeavour to achieve an appropriate balance in its copyright and related rights system, among other things by means of limitations or exceptions … including those for the digital environment” and “giving due consideration to legitimate purposes as … criticism, comment, news reporting, teaching, scholarship, research and other similar purposes; and facilitating access to published works for persons who are blind, visually impaired or otherwise print disabled.”

In effect, IP rights regimes are a finely calibrated balance between the monopoly of rights holders, and the “fair use / fair dealing” rights of everyone else. It is up to each country to hone the different elements of IP protection and usage to come up with a legal regime they can live with and thrive under. The TPP, when all is said and done, will allow Canada to keep striking this delicate balance. For example, under the TPP Canada can keep its own unique form of “notice and notice” Internet intermediary liability legal regime (the US, for example, has a different “notice and take down” system). Equally, Canada can keep its own approach to patenting higher life forms (as exemplified by the so-called Harvard Mouse decision — again, in contrast to a different standard found in the US).

Similarly, under the TPP Canada has managed to keep its own approach to the non-patentability of medical treatments. In short, therefore, it’s incorrect to say that, in the TPP, Canada gives up its ability to tailor its IP regime to its own peculiar needs and desires. Rather, the TPP’s IP provisions reinforce sensible rules that have long been enshrined in Canadian law and practice, together with some sensible additions that will benefit Canadian IP rights holders without overly burdening IP users in this country.


George Takach is a senior partner at McCarthy Tétrault LLP and the author of Computer Law.