Late last month, Canada joined eleven other countries including the United States, Japan, and Australia in Hawaii for what many experts expected would be the final round of negotiations on the Trans Pacific Partnership. According to media reports, the Canadian government was among those expecting the talks on the proposed trade deal that covers nearly 40 per cent of world GDP to conclude, with officials lining up the corporate community to immediately express their support for the agreement.
However, negotiators left Hawaii empty handed, as disputes over intellectual property laws, safeguards and tariffs for the dairy and sugar industries, as well as disagreement over the auto sector, could not be resolved. With Canada plunged into an election campaign hours later, the government sought to assure its TPP partners that it could continue to negotiate even while acting in a “caretaker” capacity.
My weekly technology law column (Toronto Star version, homepage version) notes that while those negotiations are expected to resume in the weeks ahead, sources advise that Canada dropped numerous demands on key patent and copyright issues in Hawaii, likely in the mistaken belief that a concluded deal was imminent. Indeed, after withholding agreement on critical issues such as anti-patent trolling rules, website blocking, restrictions on digital locks, trademark classification, and border enforcement, Canadian negotiators caved to U.S. pressure but failed to garner agreement.
For example, a leak of the TPP intellectual property chapter as of May 2015 revealed that Canada supported an Australian proposal to allow countries to cancel patents that are used in an abusive or anti-competitive manner. The provision, which was opposed by the U.S., was designed to give countries the freedom to target patent trolls, which refers to instances when companies that had no involvement in the creation or invention of a patent demand licences or other payments from legitimate companies by relying on dubious patents. The language on patent cancellation due to abusive or anti-competitive conduct was removed in Hawaii.
The parties similarly reached agreement on rules for Internet service providers in the latest draft. Chile, which had opposed special rules to accommodate Canada’s notice-and-notice provision in the TPP, was granted its own carve out that will allow it to maintain the system found in the Chile – U.S. Free Trade Agreement.
For Canada, the deal on ISPs means that government has agreed to induce providers to “remove or disable” access to content upon becoming aware of a decision of a court of a copyright infringement. The broadly worded provision could force Canadian ISPs to block content on websites after being notified of a foreign court order – without first having to assess whether the site is even legal under Canadian law.
Canadian negotiators caved on a wide range of other issues. While still holding out against establishing new criminal liability for the removal of “rights management information” (rules associated with Canada’s controversial protection of digital locks), Canada agreed to expanded restrictions on the importation or distribution of goods whose rights management information has been altered.
Canada also dropped opposition to new copyright rules on sound recordings and trademark rules involving the use of an international classification system. It agreed to heighten border enforcement measures involving in-transit shipments of goods that merely pass through Canada without remaining in the country and to use best efforts to expand trademark protections to “scents”.
There are still some unresolved issues in the Hawaii draft, particularly those involving the term of copyright (which the U.S. wants Canada, Japan, New Zealand, and Malaysia to extend by an additional 20 years) and many pharmaceutical patent issues. Yet Canadian negotiators appear to have badly blundered by prematurely making important concessions but failing to close the deal. As a result, it seems likely that Canada will be forced to concede on other key issues when countries next meet to finalize the TPP.