Jacob Schindler

Policymakers and academics are debating how certain provisions in a leaked draft of the Trans-Pacific Partnership (TPP) trade deal could affect IP-related laws in Australia and other prospective member states, including those governing plain packaging of tobacco products. The chapter that has become public concerns investor-state dispute settlement (ISDS), an arbitration process by which corporations can make claims for damages against foreign governments. Philip Morris is currently using ISDS to challenge Australia’s plain packaging law and anti-tobacco regulations in Uruguay.

Before we get started, just a reminder that this is a leak – it could be out of date or misleading and it constitutes just one chapter of a massive agreement being negotiated by 12 countries.

Reaction to the leak was swift in Australia, with a Sydney Morning Herald headline warning that local health and environmental rules were “under threat”. That article specifically mentioned plain packaging as a potential target of investor-state disputes, with Australian National University associate professor Matthew Rimmer arguing that the chapter “serves to boost the corporate rights and powers of multinational companies… at the expense of democratic governments and domestic courts”.

ISDS provisions are intended in part to protect the investments of corporations from being expropriated – directly or indirectly – by foreign governments. In the TPP draft, as in many such agreements, ‘investment’ is defined broadly to include intellectual property. Philip Morris has relied upon similar language in Australia’s bilateral investment treaty with Hong Kong to argue that plain packaging “virtually eliminates [its] branded business by expropriating its valuable intellectual property”. The TPP investment chapter, however, seems to carve out important exceptions to ISDS jurisdiction in the area of intellectual property, stating:

The article does not apply to the issuance of compulsory licences granted in relation to intellectual property rights in accordance with the TRIPS Agreement, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with Chapter QQ._ (Intellectual Property Rights) and the TRIPS Agreement.”

It is difficult to get the whole picture, of course, without seeing the IP chapter (an earlier version of that was published by Wikileaks in 2013). But this paragraph would appear to except many national IP-related laws and regulations from ISDS claims, meaning any disputes would have to be addressed in a state-to-state context. At least one law professor, though, sees it differently. Sean Flynn, the associate director of the Program on Information Justice and Intellectual Property at American University’s Washington College of Law, wrote:

On first glance, it may appear that these passages protect intellectual property policy decisions from ISDS cases. The problem is in the qualifications – limitations and exceptions are only protected from ISDS attack ‘to the extent that such issuance, revocation, limitation or creation is consistent with Chapter QQ._ (Intellectual Property Rights) and the TRIPS Agreement.’ These qualifications invite ISDS tribunals to determine the extent that revocations, nullifications or exceptions to rights are consistent with TRIPS and the IP chapter of the agreement – a broad jurisdiction indeed.

WTR spoke with Tania Voon, a professor at Melbourne Law School who has written about the interplay between Australia’s plain packaging laws and trade and investment agreements. Asked about Flynn’s argument, she responded: “That’s one reading. But you might also say that the passage narrows the scope.” She says despite the media attention, this looks like a fairly standard ISDS chapter, not an unprecedented one; there is broadly similar language in many of Australia’s 21 bilateral investment treaties. “In summary, there’s a lot in the agreement that people are very concerned about. But there’s also quite a lot in there showing that the people negotiating it are aware of these concerns about intellectual property”. 

But some Australians remain sceptical of ISDS. The country is having to defend a potentially costly lawsuit from Philip Morris over a law that has already been upheld by the nation’s highest court. That matter is ongoing, with the Australian government most recently arguing that it should be dismissed on procedural grounds. In the past, Australian trade negotiators have generally opposed ISDS, but the Abbott government has softened that stance, now saying it considers the issue on an ad-hoc basis. The leaked TPP chapter contains asterisks noting that Australia will only agree to its contents if “certain conditions” are met.

But as to whether Australia’s existing anti-tobacco regulations are under threat from this specific trade agreement, that falls into the ‘probably not’ category, according to Voon. “It’s unlikely that it would cover that particular dispute because the TPP would enter into force subsequently”, she notes.

WTR is keeping an eye on the Philip Morris cases and continuing to monitor the IP-related aspects of the TPP, which could have big effects on this region. As ISDS disputes proliferate (see graph), IP counsel would do well to keep trade issues on their radars, too.

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