U.S. Expanding the Law – Domestic and Foreign – to Benefit Corporations

Ben Klemens
Ben Klemens Senior Statistician - Office of Tax Analysts, U.S. Department of Treasury

February 17, 2008

As a U.S. taxpayer, you may be contributing to fewer cheap drugs on international shelves. Public dollars support the Office of the U.S. Trade Representative, the trade agency with authority to pressure foreign governments to change their domestic intellectual property laws. As such, the agency actively presses for laws that would keep generic drugs out of markets worldwide.

Congress is considering legislation to create a separate executive branch office dedicated to using government resources for lobbying other countries to change their laws, sometimes exclusively to benefit certain U.S. companies.

That’s a bad idea for patients here and abroad, because it would give the U.S. government more power in an area where it should instead have less.

The international intellectual property system is based on an ingenious 1994 international treaty: Rather than establishing an unwieldy international copyright and patent office, the agreement merely stipulates that every signatory country must have domestic copyright and patent systems that meet certain basic requirements.

The trade agency’s interpretation of what other countries’ domestic laws need to cover expands beyond the broadest definitions within U.S. law. To give one example, data gathered during clinical trials of new drugs are not protected by copyright, patent or trademark in the United States. But as a rule of bureaucratic procedure, the Food and Drug Administration restricts use of test results finding that a brand-name drug is safe when considering the safety of identical generic drugs. Even though it is hard to argue that this FDA rule is an intellectual property law, the trade representative is using its authority to press for comparable rules restricting the approval process for generic drugs in other countries.

It doesn’t take much sleuthing to follow the money back to the U.S. pharmaceutical manufacturers on the trade agency’s advisory panel, who can maintain monopolist profits while a generic drug is blocked from the market in Guatemala, Malaysia or any of the dozen other countries that the trade agency is pressuring to adopt U.S.-style restrictions on generic drug approval.

Proselytizing U.S. intellectual property law would be easier if we knew exactly what U.S. intellectual property law is, but many debates still rage in the courts and in the law journals. Is software patentable? Justice Breyer, Justice Stevens and the U.S. Patent and Trademark Office’s semi-judicial board of appeals have clearly expressed that it is not. Yet the trade representative thinks it is, which is why a 2000 agreement with Jordan required that country to change its domestic laws to better accommodate the patenting of software, and its nonbinding reports find fault with countries whose patent systems do not allow software patents.

The U.S. Trade Representative’s treaties bind all parties to rewrite their domestic laws accordingly. That is, the agency can dictate how Congress is to write domestic law, and how federal courts interpret it, via its international treaties. We all want intellectual property law to evolve with the times, but every new treaty by the trade agency makes evolution a little more difficult.

HR4279, now pending in the House Judiciary Committee, would establish an Office of the U.S. Intellectual Property Enforcement Representative, spinning off intellectual property from the trade representative’s portfolio into its own office, without repealing the agency’s authority to negotiate other countries’ intellectual property laws. The new office would have authority to define the scope of intellectual property as it sees fit, and it would have expanded ability to use the resources of other departments (the Department of Justice, the State Department, Homeland Security, state and local governments, and many others) in pressuring other countries to change their domestic laws accordingly.

The 1994 treaty on trade-related international property defines a simple base for copyright, patent and trademark, and it makes sense for the trade agency to hold countries to the basic framework. But our trade representative has gone well beyond that, to simply interpreting intellectual property as its corporate advisory boards wish, and then using the muscle of the U.S. government and the resources of U.S. taxpayers to press other countries into changing their laws to suit that interpretation. Congress needs to restrict the trade representative’s expansive tendencies, instead of releasing what little rein is left.