A Free Trade Area for the Americas
Draft Sign-On Position Paper
To be Submitted To The
Working Group On Intellectual Property Rights
Fourth Trade Ministerial And Americas Business Forum
San Jose, Costa Rica
This document is on the web at
The Free Trade Area for the Americas (FTAA) is a proposed trade
agreement for the Western Hemisphere, which is like a super NAFTA. There
are currently 34 countries involved in the negotiations. Like NAFTA, the
GATT and other international trade agreements, it will largely be focused
on non-tariff issues. Some journalists continue to write about these
trade accords as though the were turn of the century agreements about
tariffs, but this misses the larger and more important issues.
In 1998 there are several important negotiating meetings, including
meetings of trade ministers and their staffs, plus the so-called "Business
Forum," which will be held in San Jose, Costa Rica on March 16-18, 1998.
The process for the FTAA negotiations is anything but open. Many of the
key documents and papers have not been released to the public, and hardly
anyone is aware that the negotiations are taking place.
The Business Forum is for the public, and in theory is open to anyone.
The Business Forum is organized into 13 working groups, including working
groups on Intellectual Property Rights, Investment, Services, Competition
Policies, Government Procurement, Sanitary and Phytosanitary Standards,
and other topics.
I attended last year's Business Form meeting in Belo Horizonte, Brazil,
where I distributed a paper to the Working Group on Intellectual Property
http://www.cptech.org/pharm/belopaper.html). I was permitted to
participate in the discussions. The public sessions are called the
"Business Forum," and most of the non-profit organizations are trade
groups. Of the 2,500 delegates attending the Business Forum, I did not
meet another person representing a consumer or environmental group. Most
of the attendees represented very large firms. The two leaders of the
working group on Intellectual Property Rights worked for pharmaceutical
and biotechnology firms. Surprisingly, the firm with the largest number of
representatives at the IPR working group was Microsoft, which was pushing
an aggressive anti-piracy agenda that included "special forces" for
copyright violations, special IP courts, and provisions that would give
private corporations the right to obtain warrants to search for
unregistered software or other copyright violations. These provisions
have strong support among the U.S. trade negotiators.
You can find some information about the FTAA process on the Web. The Organization for
American States has some information at:
vhttp://www.sice.oas.org/Ftaa/Belo_e.stm (no period),
but it is not very complete, and omits many controversial issues which
are being discussed. Information about the Costa Rica meetings are
also on the Web at:
http://www.alca.co.cr/indexi.htm (no period).
The deadline for submission of Working Group position papers was
January 31, 1998, but it was just extended to February 15, 1998, after
criticism that few persons were informed of the deadlines. February 15,
1998 is also the putative deadline for registration, however, last year,
this too was extended.
CPT has drafted a set of positions to present at the IPR Working Group
on (I) IP and health care, (II), information technologies, copyright and
neighboring rights, and (III) general IP issues. The way the process
works, groups typically jointly submit comments, to demonstrate a broader
base of support. We are seeking endorsements of these recommendations
from other groups. However, since our recommendations cover a wide range
of topics, we don't expect blanket endorsements, but rather endorsements
of particular points. For example, to endorse the position that
"Legislation to protect copyrights or neighboring works should seek
solutions which are least invasive of personal privacy," a firm or group
would endorse draft position II.2. Those who are not concerned with
health care should skip to sections II and III, which are relatively
Individuals cannot submit position papers, but just about any private
sector business or organization can, no matter how large or how small.
I would appreciate very much endorsements of any of our draft IP
working group positions, and encourage groups to write their own
position papers, for any of the working groups. These may be sent
(a word processing file in WordPerfect format) as an attachment to
electronic mail, to:
firstname.lastname@example.org (no period).
As noted above, the deadline is February 15, 1998.
Consumer Project on Technology
202.387.8030; fax 202.234.5176
I. Selected Recommendations for Healthcare and IP
- Intellectual property regimes for healthcare should achieve
public health goals. It is not
appropriate to treat healthcare is a matter of commerce only.
In the area of healthcare, the focus of trade agreements on
intellectual property should be the
equitable and reasonable sharing of the costs of research and development, rather than the
particular mechanisms for R&D support, such as patents or exclusivity marketing provisions.
- An important measure of equitable sharing is per capita
expenditures on healthcare R&D.
Countries with higher per capita incomes should assume higher burdens for R&D
- Countries should have discretion to choose mechanisms that raise
per capita R&D
expenditures. R&D by commercial firms is important, but so is R&D spending by
governments, non-profit entities and other public health entities.
- Policies should encourage R&D for pharmaceuticals and other new
therapies and medical
devices, as well as items less likely to attract private investment. There are important market
failures in R&D. Research on basic medical science, adverse reactions to pharmaceuticals,
dietary practices, appropriate technologies for rural healthcare, epidemiology, therapies for low
income patient groups, and more generally, research which is not likely to lead to profitable
inventions, is also important. Public health goals reflect research priorities which differ in
important respects from investor priorities.
- Countries should have discretion to limit or eliminate patent
protections for areas of public
interest, such as healthcare or life forms.
- Countries should have discretion to use compulsory licenses to
achieve public interest goals.
This is particularly important in complex fields of technology, where inventions are essential
inputs for other inventions.
- Countries should have discretion to require minimum levels of
reinvestment in healthcare R&D. A program of minimum reinvestment in
R&D, or a required contribution to a national R&D program (as has
been proposed by the U.S. Senate) may achieve fair burden sharing for
- Countries should avoid overbroad patents and other approaches
which discourage innovation and lead to anitcompetitive practices.
- Protection of trademarks should not be interpreted a limitation
on a government's ability to regulate marketing of products or services.
In the area of healthcare, governments clearly have the power to require
plain paper packaging of cigarettes, bar billboard ads for cigarettes or
alcoholic beverages, require standardized packaging of infant formula,
promote generic drug use, and other matters which protect the public's
- "Sweat of the brow" protections for health care research should
not be excessive, or create
inappropriate anticompetitive barriers to entry. Protections based upon investment, rather than
genius, should be limited to avoid anticompetitve effects, and subject to compulsory licenses,
where licensing fees are related to the costs (and risks) of the unpatented research. Firms
seeking sui generis marketing exclusivity for unpatented investments in research should be
required to make financial disclosures about investments which receive exclusivity marketing
privileges. Such disclosures are needed to evaluate the reasonableness of the exclusivity
- A blanket five year period of exclusivity for reliance upon health
registration data is excessive.
- Health registration data should be disclosed to the public,
following the principles presented by
the International Working Group on transparency and accountability in drug regulation.
- Patent, copyright and trademark provisions of the FTAA should not
create barriers to parallel
imports. Parallel imports of pharmaceuticals are particularly important for smaller economies
which suffer from inadequate competition. (See CPT's October 16, 1997 comments to the
Portfolio Committee on Health, Parliament, Cape Town, South Africa, on the Medicines and
Related Substances Control Amendment Bill and South African Reform of Pharmaceutical
Policies, on the web at: http://www.cptech.org/pharm/sa/sa-10-97.html).
- Patent or other IP rights should not be used to prevent persons
from engaging in health care
research. When necessary, governments should provide for policies on material transfers or
compulsory licenses which expand opportunities for medical researchers.
- Patents should not be issued for surgical procedures or doses of
II Information technologies, copyright and neighboring rights
- The Internet and other digital information technologies pose new
issues for copyright and neighboring rights.
- Legislation to protect copyrights or neighboring works should
seek solutions which are least invasive of personal privacy.
- Legislation to protect copyrights or neighboring works should
avoid barriers to the development of new information technologies.
- Legislation to protect copyrights or neighboring works should
protect non-commercial and
commercial fair use. Countries should be given wide latitude to define fair use rights for
educational and research purposes, including non-commercial distance education programs.
- Efforts to protect "sweat of the brow" investments in databases
should not create ownership of
facts, create excessive terms or scopes of marketing exclusivity, authorize anticompetitive
licensing practices, or exclude fair uses of data.
- Efficient development of information technologies are enhanced by
policies which promote
interoperability of computer and telecommunications software and hardware.
- Competition authorities should discourage anticompetitive
software licensing practices and other monopolistic practices.
- Mass market "shrink-wrap" or "click-on" licenses should not be
permitted to include
anticompetitive provisions. For example, mass market licenses should not be permitted to
contain restrictions on reverse engineering, nondisclosure clauses, or restrictions on the use of
the product that stop the customer from creating a competing product. (This recommendation
adopted Cem Kaner, "Restricting Competition in the Software Industry: Impact of the Pending
Revisions to the Uniform Commercial Code," Presented to the Appraising Microsoft
conference, Washington, D.C., November, 1997, on the web at:
- Avoid problems associated with overbroad patent or copyright
protection, and anticompetitive
barriers to the development of interoperable works. Here it is useful to quote from the May
1996 U.S. Federal Trade Commission staff report, Competition Policy in the New High-Tech,
Some participants expressed concern that overbroad copyright
scope might either create disincentives for, or erect roadblocks
against, follow-on innovation. One computer industry
representative found overbroad copyright scope "harmful to
progress because software, more than anything, is a series of
inventions piled on top of each other." Another emphasized
that broad copyright scope can create a risk of
"overcompensation" in the sense that "[a]n author or inventor with
too broad a monopoly over a work can seek compensation from
authors of inventors of [interoperable] works, driving up the cost
of such works, [and ultimately] resulting in fewer works being
produced." Others suggested that broad scope could thwart
efforts to enhance interoperability, which would in turn impact the
growth of computer networks, the anticipated source of
substantial innovation in the near term. Some suggested that
the owner of a software copyright should be prevented from
enforcing its copyright as to the interface, especially once that
interface has become a standard, or they advocated
compulsory licensing of interface standards that dominate the
market. [Footnotes are reported in original, and in CPT's
1997 position paper]. See: Anticipating the 21st Century:
Competition Policy in the New High-Tech, Global Marketplace,
a Report by the Federal Trade Commission Staff, Vol. 1. May
1996. The entire report is on the Web at:
III General IP issues
- Trademark, copyright or other IP rights should not be used to
discourage criticism, parody, or free speech.
- Patents should not be used to protect business practices
from competition. Examples of business practices which have received
patent protection in the United States are bonds which base interest
payments on particular forms of inflation (U.S. Patent No. 4,839,804,
"Method and apparatus for the funding of a future liability of uncertain
cost"), or the use of federal tax loopholes to minimize the costs of the
loans from pension fund assets (Patent No.5,206,803, for a "System for
enhanced management of pension-backed credits"). Business practices
patents are inappropriate and anticompetitive.
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