Corporate Power Unbound: Investor-State Arbitration of IP Monopolies on Medicines

Northeastern University School of Law Professor Brook K. Baker and Katrina Geddes, Master in Public Policy Candidate at Harvard University’s Kennedy School of Government, have written a thought provoking article entitled, “Corporate Power Unbound: Investor-State Arbitration of IP Monopolies on Medicines – Eli Lilly v. Canada and the Trans-Pacific Partnership Agreement,” Northeastern University School of Law Research Paper No. 242-2015. In their scholarly paper, the authors examine investor-state arbitration in the context of pharmaceutical patents.

Here is the abstract:

Despite the deep irony of free trade agreements being subverted to codify and extend anti-competitive monopoly rights and despite the equally deep irony of foreign investors having greater enforcement rights than local investors, the joining of enhanced intellectual property rights (IPRs) and protections and strengthened investor rights is creating a wild-west opportunity for unbounded corporate power. Two current contestations show the dangers of this expanded power in sharp relief. In the Trans-Pacific Partnership Agreement (TPPA), at the behest of its powerful pharmaceutical lobby, the United States is seeking the most extreme forms of pharmaceutical patent, data, and enforcement rights that have ever been proposed at the same time that it is seeking enhanced IP-related investor rights in the most recently leaked Investment Chapter. In the pending investor-state-dispute-settlement case under an older but parallel North America Free Trade Agreement (NAFTA) investment clause, an American pharmaceutical company, in Eli Lilly v. Canada, is for the first time claiming $500 million in investment-related damages because of Canada’s sovereign decision to invalidate previously granted patents on two medicines on the grounds that those patents failed to meet well-established Canadian standards of patentability.

This article is not written as an abstract juxtaposition of these two current events. It is written to expose the dangers that countries face, especially low- and middle-income countries, in trade negotiations with the U.S., Europe, and Japan that seek to impose stronger patent, data, and market entry protections and at the same time seek to expand the armamentarium of enforcement powers available to pharmaceutical behemoths. Part II of the paper contains a brief introduction to the international IP regime, namely the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the TRIPS-plus pharmaceutical protections being sought in the mostly recently leaked TPPA Intellectual Property Chapter and Transparency Chapter still being negotiated between twelve Pacific rim countries. Part III gives a brief historical background on investment treaties and investor-state-dispute-settlement (ISDS). Part IV analyses the TPP Investment Chapter in more depth, particularly its provisions that deal with protection for and enforcement of IP-related investments. Part IV discusses the pending Eli Lilly v. Canada ISDS arbitration, including the claims and defenses of the parties. Part V concludes with a recommendation that investment chapters be struck from the TPP and other trade agreements or that such chapters should not apply whatsoever to the protection or enforcement of IPRs given the many other enforcement powers available to patent holders. The article claims that extending boundless corporate power to Big Pharma through adoption of ISDS for IPRs presents a grave danger to the communal right to health and the right of access to affordable medicines for all.

This and other research papers authored by Professor Baker and Ms. Geddes may be downloaded free of charge from the Social Science Research Network.

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