September 27, 2016

The Case for the TPP: Innovation to the World

This article was originally published in Above the Fold on September 27, 2016.
What is the Trans-Pacific Partnership (TPP) all about? With debate over this 12-nation trade agreement now underway, the Chamber is publishing this series making the case for the TPP’s approval. This installment summarizes its provisions on intellectual property.

The United States is “the innovation center of the world”—think digital connectivity, life-saving medicines, alternative energy sources—says Francis Gurry, Director-General of the United Nations World Intellectual Property Organization. That in large part is due to a rigorous system of intellectual property (“IP”) laws, grounded in Article One of the U.S. Constitution.

American IP laws are the strongest in the world according to the U.S. Chamber of Commerce International IP Index. That IP strength, the U.S. Department of Commerce finds, has empowered innovative businesses to create more than $6.6 trillion of U.S. GDP, drive 52% of U.S. exports, and support 45.5 million American jobs.

U.S. IP laws create an intangible infrastructure that moves ideas from mind to market. Innovators invest their time and resources in developing ideas in the same way that a conventional factory invests in brick and mortar and machinery. When IP laws give those innovators the ability to turn their ideas into enforceable assets—through patents, copyrights, and trademarks, the same way a manufacturer holds legal title to its factory and equipment—they gain the confidence to invest in high-risk, often high-cost, research and development.

Likewise, investors, be they venture capitalists, local banks, or shareholders, obtain the confidence to invest in the entrepreneur. In this way, the strength of the U.S. IP system enables connections between businesses at every level of the economy—from start-ups through to multinationals—and the financing that underpins investments in ground-breaking innovations.

Despite the clear success of this model, much of the rest of the world lags far behind in implementing an IP infrastructure adequate to either support domestic innovation or honor the intellectual property rights of American innovators and artists. That’s where trade agreements come in.

Agreements like the Trans-Pacific Partnership (TPP) commit U.S. trading partners to implement a set of international best practices that elevate the global IP standard, creating the conditions for innovation worldwide. That means not only that U.S. innovators and creators are able to make their work more broadly available to people around the world—and get paid for it, boosting the U.S. economy in the process—but also that the creative capacity of people everywhere is unleashed.

When the world needs that one-in-a-billion idea that will cure cancer, or provide a new source of sustainable energy, wouldn’t the innovative capacity of seven billion global citizens be helpful?

TPP and similar agreements contain provisions to enhance global IP standards that generally fall in one of four buckets:

  • Incentive. Provisions in the first bucket re-affirm each country’s commitment to provide basic IP incentives in law: the 20-year patent term for a new technological discovery, for example.
  • Eligibility. In the second bucket, they define criteria clarifying the types of discoveries or creative works that are eligible to be registered as intellectual property rights.
  • Enforcement. Provisions in the third bucket commit countries to enforce their intellectual property laws and provide credible, deterrent penalties for infringement.
  • Rule of Law. The fourth bucket is made up of provisions that provide a rule of law environment for innovators, among them rules that require internet service providers to take down copyright-infringing content when identified, or for regulatory agencies to notify a patent holder when marketing approval is sought for a potentially infringing product. Such measures provide the legal certainty necessary for high-risk innovative activity and reduce the expense of litigation that needlessly increases costs to consumers.

Finally, building on the legacy of patents, copyrights, and trademarks, the TPP goes further than previous trade agreements to address the realities of a digital economy. TPP contains groundbreaking rules criminalizing the theft of trade secrets, which are critical to the competitiveness and strength of U.S. sectors as diverse as manufacturing, climate change technologies, chemicals, defense, biotech, IT services, and food and beverages. Remarkably, before now, few countries have criminalized trade secret theft, and fewer still provide a deterrent level of either civil or criminal remedies.

As the global leader in innovation, the United States has not only an economic interest, but a moral responsibility, to foster adoption of a proven IP model that can broaden access to innovative and creative products for all the world’s citizens. Even more importantly, this model puts the conditions in place to empower people everywhere to bring their own ideas to market in the same way that entrepreneurs and artists have done so successfully in the United States. TPP is a critical step in the fulfillment of that duty.

Patrick Kilbride is the executive director of international intellectual property for the U.S. Chamber of Commerce Global Intellectual Property Center.

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