USMCA: Intellectual Property Rights (IPR)



Updated January 6, 2020
USMCA: Intellectual Property Rights (IPR)
Background
IPR Chapter of USMCA
The United States-Mexico-Canada Agreement (USMCA) is
The IPR chapter aims to support technological innovation
a proposed free trade agreement (FTA) negotiated among
to benefit both producers and users, while promoting a
the three parties to update and replace the 1994 North
balance of rights and obligations. It is enforceable through
American Free Trade Agreement (NAFTA). On November
government-to-government dispute settlement. General
30, 2018, President Trump and the leaders of Mexico and
obligations include upholding international agreements and
Canada signed USMCA. Congress would need to pass the
providing “national treatment”—not discriminating against
legislation to implement the agreement before it can enter
foreigners on IPR. Some provisions in the IPR chapter have
into force. On December 10, 2019, the three countries
phase-in periods for Canada and Mexico. (IPR issues also
agreed to a protocol of amendment to the USMCA, which
arise in the USMCA investment chapter; as a form of
affects some IPR provisions.
investment, IPR benefits from USMCA investor
USMCA would make notable changes to NAFTA
protections. See CRS In Focus IF11167, USMCA:
provisions on intellectual property (IP)—creations of the
Investment Provisions, by Christopher A. Casey and M.
mind embodied in physical and digital objects. IPR are
Angeles Villarreal.)
time-limited rights that governments grant to inventors and
Patents
artists to exclude others from using their inventions and
Patents protect new inventions, such as pharmaceutical
creations without permission. IP is a key source of U.S.
products, chemical processes, business technologies, and
comparative advantage; advancing IPR protection globally
computer software. USMCA defines patentable subject
has been a U.S. trade negotiating objective since 1988 (P.L.
matter as new products and processes. Patent protection for
100-418). IPR trade agreement provisions were first
new uses, methods, or processes of a known product were
included in NAFTA and, subsequently, the World Trade
included in the USMCA, but were removed by the
Organization (WTO) Agreement on Trade-Related Aspects
amendment. Under TRIPS, patented inventions must
of Intellectual Property Rights (TRIPS). The 2015 Trade
receive a minimum term of 20 years of protection. USMCA
Promotion Authority (TPA, P.L. 114-26) retains prior U.S.
requires adjustments of patent terms for “unreasonable”
trade negotiating objectives for U.S. trade agreements to
delays in the patent examination or regulatory approval
“reflect a standard of protection similar to that found in
processes. “Unreasonable delays” include a delay of more
U.S. law” (“TRIPS-plus”), and adds new objectives to
than five years from the date of filing or three years after a
combat cyber theft and protect trade secrets.
request for examination of an application, whichever is
later.
Select IPR Provisions in USMCA
USMCA includes a notification system and procedures
Several provisions in USMCA reflect new or updated issues not
(e.g., judicial or administrative proceedings) to assert patent
in current U.S. FTAs, including the fol owing:
rights or to challenge a patent’s validity. These procedures
Internet Service Providers (ISPs). Establishes flexibilities to
are more flexible than “patent linkage”—a provision
address ISP copyright liability.
common to many prior U.S. FTAs whereby regulatory
Geographical indications (GIs). Requires administrative
authority cannot grant marketing approval to a generic drug
procedures for recognizing and opposing GIs, which protect
without the patent holder’s permission.
distinctive products from certain regions, including guidelines for
Regulatory Exclusivities
determining “common” names. Also includes transparency and
Some USMCA provisions specific to pharmaceuticals aim,
due process procedures for GIs that parties protect through
international agreements.
based on U.S. trade negotiating objectives, to “encourage
innovation and access to medicine.” Yet debate exists on
Trademarks. Extends trademark protection to sounds and
whether USMCA appropriately incentivizes research and
“col ective marks” and removes administrative requirements to
development for new medicines while also allowing
enable easier trademark protection and enforcement.
affordable access to medicines through market entry of
Trade secrets. Requires criminal procedures and penalties for
generic medicines. In USMCA, the debate has centered on
trade secret theft, including cyber theft; clarifies that state-
regulatory exclusivity for biologic drugs—drugs made
owned enterprises must protect trade secrets.
from living organisms (see figure below).
Enforcement. Extends IPR enforcement to the digital
Unlike most patented products, pharmaceuticals must go
environment.
through a regulatory approval process before they can be
marketed. Patent holders (generally, brand-name drug
IP-intensive goods and services are an important part of
companies) must submit test data) to the regulatory
U.S. trade with Canada and Mexico. The United States has
authority—the Food and Drug Administration (FDA) in the
expressed concern over certain IPR policies in both
United States—to make the case for a drug’s safety and
countries in recent years.
effectiveness. The market approval process runs
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USMCA: Intellectual Property Rights (IPR)
concurrently with any applicable patent term. Thus, the
trade secret theft, including through cyber-theft and by
monopoly protection afforded by the patent term effectively
state-owned enterprises.
is shortened by the time it takes for marketing approval.
Trademarks
A follow-on pharmaceutical, such as a generic drug or
Trademarks protect distinctive commercial names, marks,
biosimilar biologic, can obtain approval via an abbreviated
and symbols. USMCA, among other things, provides
process by relying upon the test data generated to support
trademarks with a renewable, 10-year period of protection
approval of the reference (brand-name) drug. To balance
(as in U.S. law) and removes administrative requirements to
interests in competition while encouraging innovation,
enable easier protection and enforcement of trademarks.
federal law establishes periods of exclusivity that limit
FDA’s ability to approve marketing applications for follow-
Geographical Indications (GIs)
on pharmaceuticals under certain circumstances.
GIs are geographical names that protect the quality and
Regulatory exclusivity prevents a competing firm from
reputation of a distinctive product from a region (e.g.,
relying on the reference product’s data to obtain regulatory
Chiapas coffee, Florida oranges, Canadian whiskey). The
approval of a generic drug or biosimilar for a set period of
United States aims to address GI protections that can
time. In practice, regulatory exclusivities may delay the
improperly constrain U.S. agricultural market access in
development of the generic product during that time, which
other countries by protecting terms viewed as “common,”
may overlap with, or in some circumstances run beyond the
such as parmesan cheese. USMCA contains due process
expiration of any applicable patents. For chemical drugs,
procedures for recognizing and opposing GIs, guidelines for
U.S. law provides a general exclusivity period of 5 years,
determining when a name is common, and transparency
which U.S. FTAs post-NAFTA have incorporated.
requirements for GI protection in international agreements.
U.S. law currently provides a 12-year period of exclusivity
Industrial Designs
for biologic drugs. USMCA, as originally negotiated, would
Industrial designs are the ornamental or aesthetic aspects of
have required a period of protection of at least 10 years,
a product. USMCA provides a minimum term of 15 years
however this provision was dropped in the Amendment.
of protection for industrial designs, compared to 10 years in
Figure 1. Regulatory Exclusivity in USMCA Countries
NAFTA. It also requires parties to provide an electronic
industrial design system for applications and information.
Enforcement
USMCA includes commitments on civil, criminal, and
other national enforcement for IPR violations, such as
copyright enforcement in the digital environment, criminal
penalties for trade secret theft and camcording, and ex-
officio
authority for customs officials to seize counterfeit
trademark and pirated copyright goods.
Issues for Congress
USMCA’s approach to IPR and U.S. trade policy is at the

Source: CRS.
forefront of congressional debate and a potential vote on
implementing the agreement. A central issue is whether
Copyrights and Related Rights
USMCA advances U.S. trade negotiating objectives and
Copyrights provide creators of artistic and literary works
protects IPR and innovation and other interests, such as
with exclusive rights to reproduce, publicly perform and
affordability of pharmaceuticals. Treatment of biologics is
display, and distribute their works. Debate exists over
especially actively debated in this regard. Some Members
balancing copyrights and the free flow of information, and
of Congress approve eliminating the 10-year regulatory
digital trade raises new issues. USMCA includes:
exclusivity requirement for biologics in USMCA; they
Copyright terms of life plus 70 years, or 70 years from
argue that it would have restricted the ability of Congress to
publication for most works, higher than the TRIPS
lower that period in future policy discussions. Other
minimum term of life plus 50 years.
Members decry the deletion of the exclusivity period,
Civil and criminal penalties for circumventing
claiming it is critical for innovation and development of
technological protection measures, such as digital locks.
biologics. Additional issues include concerns over the
“Safe harbors” to allow legitimate online internet
implementation of IPR obligations by USMCA parties and
USMCA’s potential precedent
intermediaries to develop their business while providing
to enhance multilateral
enforcement against digital copyright infringement.
standards. See also CRS Report R44981, NAFTA
“Notice and takedown” systems
Renegotiation and the Proposed United States-Mexico-
to address
Canada Agreement (USMCA), by M. Angeles Villarreal
intermediary liability by which right holders notify
and Ian F. Fergusson, and CRS In Focus IF10033,
online service providers of infringing content to request
Intellectual Property Rights (IPR) and International Trade
removal of that content, while allowing alternative
systems (e.g., “notice and notice”
by Shayerah Ilias Akhtar and Ian F. Fergusson.
in Canada). U.S. law
takes a “notice and takedown” approach.
Trade Secrets
Shayerah Ilias Akhtar, Specialist in International Trade
and Finance
A trade secret is confidential business information (e.g.,
Ian F. Fergusson, Specialist in International Trade and
formula, customer list) that is commercially valuable.
Finance
USMCA requires criminal procedures and penalties for
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USMCA: Intellectual Property Rights (IPR)

IF11314


Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
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https://crsreports.congress.gov | IF11314 · VERSION 2 · UPDATED