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Update on Intellectual Property and #TPPA

Paul Matthews, NZCS CEO. 04 November 2011, 2:51 pm
Update on Intellectual Property and #TPPA

Earlier this week I met with Trade Minister Hon Tim Groser and the Government's Chief Trade Negotiator to get the inside word on what was happening with the Trans Pacific Partnership Agreement (TPPA), particularly in relation to Technology and Intellectual Property.

Mr Groser's openness and candor was excellent and I can't speak highly enough about the Minister's willingness to engage and discuss these issues. However I left the meeting more than a little concerned about the impact TPPA might still have on New Zealand's IP laws.

What is TPPA?

For those that haven't heard of this, TPPA stands for the Trans Pacific Partnership Agreement and is a trade agreement currently being negotiated by 9 countries, including New Zealand, Australia and the USA.

Some call this "the trade agreement of our generation" and indeed, the impact on New Zealand, positive or negative, has the potential to be huge.

NZCS member and NZRise co-founder Don Christie outlined the background to TPPA in this Newsline piece earlier in the year.


New Zealand's position at the start

I think it's worth talking about New Zealand's position going into negotiations to start with. As outlined in Newsline in December last year, New Zealand's opening position was made public early in the piece and had some surprisingly good comments in relation to intellectual property, such as this:

Analysis of the costs and benefits of IP protection shows that there is a tendency towards overprotection of IP in all our societies, particularly in the areas of copyright and patents. The analysis also shows that the optimal rate of protection differs between countries and that it can differ across time as countries move through different stages of economic development.

The problems of overprotection are particularly acute for technology importing countries, including developing countries. The analysis shows that for these countries, IP rights that are too strong will detract from innovation rather than promote it. TRIPS, therefore, includes important flexibilities which are important for technology importing countries as they seek to use IP as a development tool. These flexibilities are designed to allow technology importing countries to make the same transitions that technology exporting countries made to become knowledge rich economies (i.e. technology exporting countries have in most cases evolved from being technology importing countries and these same countries pursued quite different IP policies in those circumstances.) FTAs and other agreements that seek to limit such flexibilities simply act against the interests of technology importing countries. (My emphasis)

We were very proud to see this from our Government and it sums things up nicely, including why it's fundamentally important to the growth of technology in a relatively "young" country like New Zealand that we don't end up with an overly heavy-handed IP enforcement regime as we grow and develop.

Nobody's saying IP shouldn't be protected by the way - it absolutely should. However software patents and other IP mechanisms are designed to enforce a "status quo" approach where those countries in a "development" phase (such as New Zealand) are in a far less advantageous position as those in a "mature" market phase, such as the USA, and it's great to see that recognised by our Government early in negotiations.


And now

Discussing this with the Minister it was clear that New Zealand's position hadn't changed much from this opening position. Both he and the negotiating team clearly understand the issues and the concerns of many in our sector (and the public at large) and it's obvious from other released correspondence that they've been pushing this point hard in TPPA negotiations.

However it's equally as clear that the United States are pushing bloody hard the other way, and if anything that appears to have intensified.

Back in February the text of the US-written chapter dealing with Intellectual Property was leaked and made for sobering reading. As an example, Article 8 of this document deals with patents and, as written in that draft, specifically prevents a country from determining for themselves the types of patents they will recognise.


Impact on New Zealand law 

As many will know, New Zealand has recently completed a review of the outdated Patents Act and amongst other things the new Bill, supported by both sides of the House, contains the following exclusions in Clause 15:

(2) An invention of a method of treatment of human beings by surgery or therapy is not a patentable invention.

(3) An invention of a method of diagnosis practised on human beings is not a patentable invention.

(3A) A computer program is not a patentable invention.

All three of these exclusions would be specifically disallowed in this draft of the TPPA, regardless of the fact that New Zealand's Commerce Select Committee, made up of all parties in Parliament, unanimously supported them.

You read that right: the proposed Article 15 of TPPA would specifically prevent New Zealand enacting law that was unanimously agreed by all parties in our parliament. In essence, if this clause doesn't change and we sign up to TPPA, New Zealand law written through a transparent Select Committee process will be overridden by a foreign country's view of patents.

While it has been denied, I find it hard to believe that the reason the Patents Bill hasn't been passed into law yet is not because it's awaiting the outcome of TPPA negotiations. Time for a Tui ad I reckon.


Sovereignty under threat?

Whether you like the idea of patents for pharmaceuticals, surgery, human diagnostic methods, software etc or not, this has to be ringing some alarm bells.

And I don't just mean at a practical level. Personally I think it would be terrible if corporations in New Zealand could patent medical procedures, gaining a monopoly on what could be life-saving operations. As Don Christie recently put it, the cold hard fact is that people will die.

But more than that, New Zealand is supposedly a sovereign country. We have the right to enact our own laws, full stop. It's frankly repugnant that another country appears to be attempting to use a trade negotiation to force New Zealand into cancelling laws that have unanimous NZ parliamentary support, for no other reason than to protect their own commercial interests.

The same applies to Copyright enforcement as well. Heavy-handed Copyright enforcement mechanisms such as criminalising what have traditionally been regarded as minor breaches for non-commercial gain (eg the equivalent of using a tape recorder to record music off the radio) are designed to protect specific commercial interests rather than because it's good for New Zealand as a whole.


Will New Zealand go through with it?

Minister Groser went to great lengths to outline that he understood how important these matters were to New Zealand. There are a number of significant implications in terms of the technology sector, the public, Pharmac and others as a result of these proposed TPPA clauses and if New Zealand was to go ahead with it we have to weigh these up carefully.

We also discussed the value of the Technology sector to New Zealand and the rapid growth of ICT in particular. The TIN100 Report was released this week as well and found that:

  • The top 100 technology companies now have a turnover of around $7 Billion.
  • Exports of over $5 Billion makes Technology New Zealand's second largest export sector.
  • ICT companies in the TIN100 grew by an impressive 13% year-on-year in 2011, despite the recession.

In the face of this type of growth and value to New Zealand it would certainly be somewhat disappointing if our sector was hung out to dry in TPPA by a Government chasing benefits elsewhere.

Despite all of this, however, I certainly had the distinct impression that the IP side of things was going to be the most difficult to resolve in TPPA. Every negotiation has a certain amount of give and take, however it would be grossly unreasonable if all of our give was in giving up our right to set our own law around IP matters.

To make matters worse, I couldn't help but get the impression that agriculture concessions were the primary area of concern to Government, not technology. Obviously agriculture is important for New Zealand, but at what cost to the rest of the country?

Agriculture is fundamentally important to New Zealand's economy and we don't want to be pitting one industry against another. However the fact still remains, Technology is on a strong growth trajectory and if supported, will lead New Zealand's economic recovery.

Trade as a concept is mightily important and by and large Free Trade Agreements are good things. But this recent trend of trying to negotiate IP-related issues through Trade Agreements rather than through the traditional international vehicles has to stop.

Paul Matthews is Chief Executive of NZCS, the professional body of the ICT sector.


P.S. Completely unrelated, but check out the inaugural Codemania event scheduled for March next year, complete with an exclusive 20% discount for NZCS members. This is one not to miss.


Some of the key points of this article were discussed with the Trade Minister's office following the meeting to ensure no matters discussed in confidence were disclosed and New Zealand's negotiating position was not compromised as a result of this update.


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Chris Auld 08 November 2011, 4:27 pm

"NZCS member and NZRise co-founder Don Christie outlined the background to TPPA in this Newsline piece earlier in the year."

I'm not so sure that I would categorize the linked article as a 'background to' the TPPA.

For those who didn't click here is a colour of this 'background' information.

"Kiwis usually think of trade agreements as deals that allow our farmers the same liberal access to markets the overseas organisations enjoy to our own markets. As a result, those of us outside the primary sector don't usually take much interest in these deals.

Our sectors were sold down the river in the 1980s in a fit of libertarian economic experiments that have not been repeated by any country on our planet, other than Iceland.

However, the nature of trade agreements has changed. This particularly so with the clash between the opportunities that technology is enabling today verses old business models that see their control over physical supply chains threatened. The involvement of the USA heightens this clash. The political realities of that country are that the industries that dominated the economy thirty years ago have the strongest influence on elected officials and their policy."

Even with all the disclaimers in the world; by posting the original OpEd and now by linking to it as background for your piece (which is less easy to disclaim as 'not necessarily the view of NZCS) you provide credence to some rather extreme views.

I'm not sure the author had even heard of New Zealand when it was having that 'libertarian fit'! As someone who was living here at the time; indeed as someone who has had an interest in the agricultural sector since the days of subsidies and other such nonsense, it strikes me as a rather ignorant thing to say.

Paul, would you be happy to take a similar OpEd from a former NZCS member who has a different viewpoint on free-trade in general and the TPPA in particular? If so you’ve got my details so please drop me a line.

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