CD Howe rejects IP criticisms of TPP and CETA

The C.D. Howe Institute released a report earlier today, National Priorities 2016: At the Global Crossroads: Canada’s Trade Priorities for 2016, authored by Daniel Schwanen. One of the key recommendations is to boost market access for Canadian producers by ratifying the CETA and the TPP.

The report also touches briefly on two key intellectual property issues associated with the treaties, pharmaceutical patents and copyright. On these issues, the report stated the following:

Patents seek to encourage innovation by providing firms or individuals a monopoly over new and useful products for a limited period of time before competitors are allowed to offer their own versions.

Neither the CETA nor the TPP change the length of pharmaceutical patents in Canada. Both provide forms of patent term restoration, which extends the life of a patent up to two additional years when regulators take more than five years to approve and grant market authorization to a patented product. The market authorization process usually does not take longer than five years in Canada. Moreover, the added protection will only apply to new patents, so any resulting increase in the cost of drugs will not be felt until after 2025 or so. The impact will likely be small given all the other tools governments have at their disposal to limit drug costs to the public.

Copyright recognizes the rights of a creator to be compensated for the use and distribution of an original work, even one that can easily be replicated.

The TPP mandates 70 years of copyright protection relative to the current 50 years in Canada. This would bring Canada in line with the European Union, the United States and Japan. The term extension will be costly for those who would have benefited from earlier entry of copyrighted material into the public domain. The critics have focused on these (often ethereal) costs, forgetting the benefits for Canada’s own creators of stronger protection in the TPP and in the EU. Both the CETA and the TPP reaffirm the many public-interest exceptions that allow freer use of copyrighted material. And governments also retain various tools to build up the public domain, for example by ensuring that public subsidies are directed to creators who make their material available via “creative commons”-style licenses.

Canadians are currently net buyers of IP from the rest of the world, and in that sense the IP provisions in these two agreements impose some cost on Canada. But to opt out of the TPP or the CETA would surely drive innovative activities further beyond Canada’s borders, as Canadian firms and individuals sell or ship their IP abroad where it would be better protected and its costs amortized over larger markets.

There is little consensus over the optimal level of IP protection. It is a stretch, however, to think that Canada could have unilaterally swayed larger economies to accept lower protection and enforcement standards. Canada can and should pursue more fundamental reform of the IP system in international forums like the World Intellectual Property Organization to achieve a better balance between incentives to innovation and the broader public interest in dissemination of new knowledge and technology. In the interim, however, Canada should not allow levels of protection to fall behind other trading partners to make Canada a less attractive platform for innovation.


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