Leaked TPP Investment Chapter Reveals Serious Threat to User Safeguards

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EFF.orgA new­ly leaked chap­ter of the Trans-Pacif­ic Part­ner­ship (TPP) agree­ment from Wik­ileaks has con­firmed some of our worst fears about the agree­ment. The lat­est pro­vi­sions would enable multi­na­tion­al cor­po­ra­tions to under­mine pub­lic inter­est rules through an inter­na­tion­al tri­bunal process called investor-state dis­pute set­tle­ment (ISDS). Under this process, for­eign com­pa­nies can chal­lenge any new law or gov­ern­ment action at the fed­er­al, state, or local lev­el, in a coun­try that is a sig­na­to­ry to the agree­ment. Com­pa­nies can file such law­suits based upon their claim that the law or action harms their present or future prof­its. If they win, there are no mon­e­tary lim­its to the poten­tial award.

tpp_handshake_actionblog_0This type of tri­bunal process is not entire­ly new—similar pro­vi­sions in oth­er inter­na­tion­al agree­ments have been used to under­mine laws regard­ing the envi­ron­ment, health, and oth­er reg­u­la­to­ry areas. How­ev­er, this new leaked text has revealed how these investor-state pro­vi­sions could also be used to under­mine user pro­tec­tions built into dig­i­tal reg­u­la­tions, includ­ing copy­right rules.

The TPP Invest­ment chap­ter encom­pass­es intel­lec­tu­al prop­er­ty in its def­i­n­i­tion of for­eign invest­ment, includ­ing all “oth­er tan­gi­ble or intan­gi­ble, mov­able or immov­able prop­er­ty.” In this way, it is sim­i­lar to ISDS pro­vi­sions in oth­er trade agree­ments, includ­ing the North Amer­i­can Free Trade Agree­ment (NAFTA). Under NAFTA, phar­ma­ceu­ti­cal giant Eli Lily, took advan­tage of this broad def­i­n­i­tion to tar­get a Cana­di­an court rul­ing that found one of its patents invalid. They are demand­ing Cana­da give them $500 mil­lion in dam­ages, claim­ing that Cana­da has “expro­pri­at­ed” their prop­er­ty through this deci­sion. This is one of the few, if only, known cas­es where an investor-state case has been filed over a patent issue. Since pol­i­cy­mak­ers now always seem to group togeth­er patents, copy­rights, trade­marks, and oth­er kinds of intan­gi­ble “prop­er­ty” togeth­er, it is not a far leap for Big Con­tent com­pa­nies to feel embold­ened by this patent case to begin under­min­ing user rights in copy­right law as well.

But there’s some­thing par­tic­u­lar­ly sin­is­ter about the TPP’s ver­sion of ISDS. Arti­cle II.7(5) is the pro­vi­sion on how ISDS applies to intel­lec­tu­al prop­er­ty issues, it reads:

The Arti­cle does not apply to the issuance of com­pul­so­ry licens­es grant­ed in rela­tion to intel­lec­tu­al prop­er­ty rights in accor­dance with the TRIPS Agree­ment, or to the revo­ca­tion, lim­i­ta­tion, or cre­ation of intel­lec­tu­al prop­er­ty rights, to the extent that such issuance, revo­ca­tion, lim­i­ta­tion, or cre­ation is con­sis­tent with Chap­ter QQ._ (Intel­lec­tu­al Prop­er­ty Rights) and the TRIPS Agree­ment.

In the foot­note to this text, it says the use of “lim­i­ta­tion” in this pro­vi­sion also include excep­tions to copy­rights. At first it seems like the pur­pose of this lan­guage is to pre­vent investor-state courts from mak­ing deter­mi­na­tions on how coun­tries enact intel­lec­tu­al prop­er­ty rules. But the last part of this pro­vi­sion is the hitch. It spec­i­fies that the ISDS pro­vi­sions do not apply to copy­right and patent rules as long as those rules are “con­sis­tent with” the TPP’s Intel­lec­tu­al Prop­er­ty chap­ter and the TRIPS agree­ment.

Who decides whether the country’s rules are con­sis­tent with the TPP? The ISDS court itself is the one who makes that deter­mi­na­tion. This means that the agree­ment gives the ISDS court the abil­i­ty to inter­pret nation­al com­pli­ance with the pro­vi­sions of the TPP, a dan­ger­ous propo­si­tion giv­en the par­ti­san nature of ISDS courts. These tri­bunals are usu­al­ly com­prised of three pri­vate-sec­tor attor­neys who take turns being the judge and the cor­po­rate advo­cate.

This is what hap­pened with the Eli Lily case, and what can hap­pen to fair use in the Unit­ed States and oth­er excep­tions and lim­i­ta­tions to copy­right in the oth­er 11 TPP coun­tries. If Hol­ly­wood, or for that mat­ter any enter­tain­ment indus­try group, doesn’t like a court’s rul­ing in favor of fair use pro­tec­tions, or if a leg­is­la­ture in anoth­er coun­try votes for a per­ma­nent excep­tion to copy­right, they could file an ISDS claim say­ing that this new rule vio­lates the terms of the TPP. Specif­i­cal­ly, they could say that they have vio­lat­ed the three-step test, which is lan­guage in the TPP that restricts, rather than pro­motes new excep­tions and lim­i­ta­tions to copy­right.

It is espe­cial­ly dis­turb­ing giv­en right­sh­old­er groups’ years long war against fair use in the Unit­ed States, Aus­tralia, and abroad. Nowhere is this more glar­ing than at the World Intel­lec­tu­al Prop­er­ty Orga­ni­za­tion (WIPO), where Hol­ly­wood and oth­er big con­tent lob­by­ists fought tooth and nail to pre­vent the pas­sage of the first inter­na­tion­al treaty for a copy­right excep­tion to help peo­ple with visu­al dis­abil­i­ties gain access to books. Rep­re­sen­ta­tives of the U.S. and EU at WIPO are still fight­ing new excep­tions for libraries. This is despite grow­ing evi­dence that flex­i­ble copy­right excep­tion sys­tems, like fair use, are inte­gral to enabling free expres­sion, inno­va­tion, and access to knowl­edge. A recent paper has found that they lead to high­er rates of growth for coun­tries’ over­all economies—which is not sur­pris­ing giv­en how fair use has enabled so many new tech­nol­o­gy busi­ness­es to flour­ish.

But the threat of ISDS on user rights does not stop with fair use. Due to the vague lan­guage of the TPP’s copy­right pro­vi­sions, big con­tent groups could attack any of the TPP coun­tries’ inter­pre­ta­tion of the copy­right pro­vi­sions, espe­cial­ly if they were more pro­tec­tive of users’ rights. A multi­na­tion­al movie stu­dio could sue a coun­try that intro­duces new rules, like those that Chile already has, requir­ing a judi­cial order before some­one can be forced to remove con­tent from a web­site. They could claim that this is incon­sis­tent with the TPP and that it has caused them to lose prof­its from ille­gal pira­cy. Or a major video game pro­duc­er, like Sony, could sue a coun­try if they enact­ed a new per­ma­nent exemp­tion to cir­cum­vent DRM—such as for third par­ty repairs of their game con­soles or for peo­ple to mod­i­fy games for per­son­al use. These ISDS pro­vi­sions could invite these and oth­er oner­ous chal­lenges to user pro­tec­tions in all 12 TPP coun­tries.

How have such pro­vi­sions, which con­fer expan­sive pow­ers on cor­po­ra­tions and under­mine demo­c­ra­t­ic rules, mate­ri­al­ize in the first place? The pol­i­cy was orig­i­nal­ly intend­ed to pre­vent for­eign assets from being ille­gal­ly expro­pri­at­ed by “rogue” gov­ern­ments in devel­op­ing coun­tries. ISDS began to appear in treaties as a way to encour­age for­eign invest­ments, by giv­ing investors this new right of arbi­tra­tion to chal­lenge gov­ern­ments if things went wrong. But what began as a rem­e­dy to a spe­cif­ic prob­lem has since been co-opt­ed to serve very dif­fer­ent objec­tives. Now, multi­na­tion­al cor­po­ra­tions have been fil­ing dozens of ISDS suits every year, with 57 cas­es filed in 2013 alone.

Dozens of civ­il soci­ety groups from around the world work­ing on all kinds of diverse caus­es have come out to denounce the TPP’s investor-state pro­vi­sions. That’s because ISDS pro­vi­sions pose a threat to any law that is designed to pro­tect the pub­lic inter­est. ISDS is an affront to democ­ra­cy itself—but the U.S. Trade Rep­re­sen­ta­tive (USTR) wants to con­vince the pub­lic oth­er­wise. Which is why they have since come out with a FAQ page on ISDS issues that is full of mis­in­for­ma­tion. If we want to make sure users keep, and gain more auton­o­my over the Inter­net and over our own devices, we can­not let such a secre­tive, cor­po­rate-dri­ven agency to pass dig­i­tal reg­u­la­tions in secret.

Addi­tion­al Analy­sis:

If you’re in the Unit­ed States, take action to stop TPP and oth­er anti-user trade deals from get­ting fast-tracked through Con­gress by con­tact­ing your law­mak­er about trade pro­mo­tion author­i­ty: