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Australia: South Korea signals intention to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership

20/05/2022    49

South Korea has recently decided to join the "CPTPP", otherwise known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

The CPTPP is what remains of the "TPPA-11" (which was itself, what remained of the Trans-Pacific Partnership ("TPP") Free Trade Agreement following the withdrawal of the United States). In March 2018, the eleven remaining signatories put pen to paper on the final text of the agreement, which even without the US, still accounted for about 14% of global GDP. The CPTPP isn't missing only the US, however – the original TPP text has been stripped of several "polarising" clauses, the most notable of which relate to IP.

So, on the one hand, South Korea is set to join an "IP lite" multilateral FTA. On the other, Australia and New Zealand already have bilateral FTAs with South Korea, replete with the usual IP-related clauses. What does this all mean, in practice?

What happened to the TPP?

Following more than 25 rounds of negotiations spanning over a decade, the text of the TPP was finally agreed on 5 October 2015. At the time, involving 12 countries and affecting up to 40% of the world's population, the TPP stood to be the largest free trade agreement in history.

However, the TPP was never ratified. Rather, it suffered by way of unfortunate timing. During the 2016 United States Presidential election campaign, the Republican Party nominee Donald Trump vowed to withdraw the US from the TPP if elected, arguing that the agreement would undermine the US jobs, income and economic independence. True to his word, the then-President Trump subsequently withdrew the US from the TPP on 23 January 2017.

And then there were eleven – Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The so-called "TPPA-11" were essentially faced with four options: pull stumps on the entire agreement, start over, ratify the previous agreement (and proceed without the US), or to proceed largely on the basis of the agreed text, sans certain clauses that may not have been included were it not for US insistence.

The CPTPP – No United States and "IP lite"

In March 2018, the CPTPP was formally signed in Santiago, Chile. The CPTPP largely followed the previously-agreed text of the TPP, with a number of "polarising" provisions suspended. Many such provisions related to IP.

As it happens, many of the now-suspended IP provisions were included only upon US insistence. With the US now out of the picture, there was no real barrier to suspending such provisions other than foregoing a "carrot" that may, in the future, have lured the US back into the TPP fold. That said, the provisions stand to be suspended, not deleted altogether – and as such, should the US wish to re-enter the TPP following a change in administration or direction, the framework remains. Interestingly, on 25 January 2018, the then-President Trump refused to rule out rejoining the TPP fold, but emphasised that it would require a "substantially better deal" for the United States. These suspended IP provisions may serve as a starting point in any future negotiations.

As of today, eight of the eleven signatories have ratified the CPTPP – only Brunei, Chile and Malaysia remain to do so.

Which patent-specific provisions have been suspended?

  • Patentable subject matter – Article 18.37.2 and 18.37.4 (second sentence): patents may be granted on new uses of known products or inventions derived from plants.
  • Patent term adjustment for unreasonable granting authority delays – Article 18.46: applying to patents granted more than five years after filing or three years after examination.
  • Patent term adjustment for unreasonable curtailment – Article 18.48: allowing for adjustment of the patent term due to delays incurred during marketing approval – particularly relevant in respect of pharmaceuticals.
  • Protection of undisclosed test or other data – Articles 18.50 and 18.51: facilitating data protection in respect to information on pharmaceuticals or biologics submitted as a requirement for marketing approval. At least a five year exclusive marketing period (for the same or similar products) was to be provided

Other suspended IP provisions

  • Term of protection for copyright and related rights – Article 18.63
  • Technological protection measures (TPMs) – Article 18.68
  • Rights management information (RMI) – Article 18.69
  • Protection of encrypted program-carrying satellite and cable signals – Article 18.79
  • Legal remedies and safe harbours – Article 18.82 and Annexes 18-E and 18-F
  • Conservation and trade (measures "to combat" trade) – Article 20.17.5 – suspend "or another applicable law" and footnote 26
  • Transparency and procedural fairness for pharmaceutical products and medical devices – suspend Annex 26A, Article 3 on procedural fairness

What sort of numbers are we talking?

Some of the numbers applicable to the original TPP were rather eye-popping: about 40 percent of the world's GDP with a combined GDP of US$28.5 trillion. Although the CPTPP represents a considerably scaled-back grouping, the revised numbers still make for impressive reading: 494 million people, 14% of global GDP (US$10.2 trillion), 15% of global trade (US$5.2 trillion) and US$404 billion in inter-signatory trade (2015).

But what does this mean for AU/NZ IPR holders, really?

In short, not much. As it happens, Australia's IP laws were already largely TPP-compliant prior to the original agreement being made on 5 October 2015, and New Zealand's were made compliant back in 2018. There were two principal reasons for Australia's early compliance: firstly, the influence of the US on the earlier TPP negotiations; and secondly, the fact that Australia had only recently (May 2004) signed a bilateral free trade agreement with the US, at which time Australian IP laws were brought into line with the standard the US expects of its trading partners.

As such, a relaxing (or suspension) of certain standards with which AU/NZ laws are already largely compliant is unlikely to have any discernible effect on the strength of IP rights granted in these jurisdictions. For Australians/New Zealanders seeking IP protection abroad, however, the "patent bargain" may be a slightly different proposition.

In general, what does the CPTPP mean for Australia and New Zealand?

Increased trade, as would expectably occur under the CPTPP, brings with it increased incentives for foreign patent applicants to file in their destination markets such as Australia and New Zealand. In this respect, the eventual ratification of the CPTPP throughout as many of the eleven signatories as possible amounts to a substantial positive for the region.

That said, any expectation of a flurry of increased trade as a result of South Korea joining the CPTPP should be tempered by the fact that Australia (2014) and New Zealand (2015) already have bilateral FTAs with South Korea.

Summary

All things considered – and purely in respect of IP – extending the CPTPP is arguably a good thing as far as Australia and New Zealand are concerned. To the extent that attracting foreign investment in our economies remains a primary goal of the AU/NZ Governments, anything that provides foreigners with an increased incentive to file within this region should be viewed as a positive (so long as it is not necessary to cede too much ground in return). On the other hand, in the not impossible scenario where the CPTPP (like the TPP before it) is never ratified downstream in Korea, we don't necessarily lose anything – the status quo in IP remains.

Spruson & Ferguson has been following the TPP (and now CPTPP) negotiations for the best part of a decade. We will continue to keep readers apprised of developments as they relate to IP.

Source: Mondaq