pouring-water
30 April 2013AmericasJose R. Trigueros

Patent term restoration and adjustment in Mexico: a TPP possibility?

The Trans-Pacific Partnership (TPP) is a free trade agreement (FTA) which aims to liberalise commerce between economies of the Asia-Pacific region. Chile, New Zealand, Singapore and Brunei are members of the agreement, while the US, Australia, Vietnam, Peru, Malaysia, Canada and Mexico are negotiating partners. Japan has officially announced its intention to join the treaty, while Taiwan, the Philippines, Laos, Colombia and Thailand have also expressed their interest.

The TPP has stirred controversy and protests due to the contents of several leaked documents regarding its provisions, particularly regarding intellectual property and copyright. The allegedly secrecy of negotiations and the lack of transparency are also hotly debated topics among its detractors.

The treaty has been considered as a way to counter China’s economic and political influence in the region, but the multiple groups opposing it generally overlook this and other arguments, focusing instead on its copyright provisions, voicing concerns regarding freedom of speech on the Internet and access to culture.

Other fields of discussion include patents, access to medicines and the alternate dispute resolution options.

The TPP is considered as a broad-scoped FTA aiming at the reduction of tariffs between parties, as well as significant reductions in the barriers to commerce and the protection of IP, and should present a significant business opportunity for emerging companies and companies willing to change the way they do business. However, as with any other FTA, enterprises which rely on traditional business methods and protectionism, and are reluctant to change, may suffer the consequences.

Mexico and the TPP

At the end of the last presidential term in 2012, then-president Felipe Calderon made a strong push to include Mexico in the TPP negotiations.

Mexico’s interest in becoming a negotiating member of the treaty was met with a mixture of enthusiasm and dismay, particularly from the US, due to Mexico’s failures to implement a coherent data exclusivity protection system for drugs and agrichemicals, as set forth in the North American FTA, and also due to customs issues.

Moreover, the controversy and secrecy of the negotiations caused discomfort within the Mexican Congress, which issued a note requesting Calderon’s government to disclose all the information regarding the TPP, the negotiation agenda, the conditions for Mexico’s acceptance and the purpose and scope of such a treaty.

The request was covered by all major news outlets in the country, causing a small wave of protests by students, academics and industry representatives who believed that the TPP would generate unfair advantages for foreign companies.

“A RECENT COMMUNICATION BETWEEN THE MINISTRY OF THE INTERIOR AND CONGRESS HIGHLIGHTED THAT MEXICO’S COMMERCE AND TRADE WITH ASIA HAD AN ANNUAL GROWTH OF 20.3 PERCENT.”

However, the Mexican government was successful in its negotiations and managed to attain negotiating party status. Furthermore, communication between the government and Congress has steadied the dissent felt against the TPP. In fact, a recent communication between the Ministry of the Interior and Congress highlighted that Mexico’s commerce and trade with Asia had an annual growth of 20.3 percent and that the TPP arguably comprised 30 percent of the gross world product.

Unfortunately, the government has been slow in informing the public and clearing up the mistrust in the TPP. Several editorials during the last months have declared the treaty as dangerous to Mexican industry and the people, even causing industry associations to claim that they will oppose the TPP by all available legal means.

Patent term restoration and adjustment

Patent term restoration was introduced in the US in 1984 through the Drug Price Competition and Patent Term Restoration Act (Hatch-Waxman). Th e purpose of the Hatch-Waxman Act was to balance the interests of innovator laboratories with those of generic manufacturers, in order to make drugs accessible for those who needed them and to incentivise the pharmaceutical industry.

One of its provisions was patent term restoration, by means of which the market exclusivity of a new substance would take into consideration the delays in obtaining a marketing authorisation from the Food and Drug Administration (FDA).

The patent term cannot be extended for more than five years. However, that five-year extension is also limited by the fact that the patent life of the product, including the extension, cannot last more than 14 years from the date when the product was approved to be marketed.

Patent term restoration has been adopted by several jurisdictions such as Singapore, Japan and the EU with varying success. Mexico faces several issues in both sanitary authorisations and patent examination, making patent term restoration a viable remedy for patent holders.

The Health Supplies Bylaws state that the process for obtaining a new drug authorisation should last no more than 180 days. Of course, delays due to backlog or other unexpected causes occur, effectively reducing the patent term; therefore, the inclusion of patent term restoration within the Mexican legal framework would offer a remedy for this situation.

However, the greatest damage for patent holders in Mexico is the long prosecution term for patent applications. The current approximate term for obtaining a patent in Mexico is four to six years. The backlog and several administrative issues within the Mexican Institute of Industrial Property (IMPI) effectively erase almost 30 percent of the patent exclusivity period, leaving the patent holder with 15 years at best to exclusively use or market their invention.

While ideally the goal should be to develop a more efficient patent examination process, patent holders should be compensated for the time lost from the patent exclusivity period. A remedy for such a situation would be patent term adjustment.

However, Mexican legal precedents clearly state that the patent term as established by law is 20 years and that cannot be extended. Those precedents arose from cases in which Article 12 of the Mexican Industrial Property Law (MIPL) was brought into question before Mexican courts.

The article’s wording was convoluted, as it stated that the term of certain patents would end when the patent filed in the country of origin ended (including extensions in the country of origin, such as those of Hatch-Waxman), thus creating the possibility of patent extensions in Mexico. But this interpretation was dismissed by Mexican courts.

Consequently, in order to implement patent term restoration and patent term adjustment in Mexico, the MIPL should be modified, as well as the Health Supplies Bylaws, particularly, Article 23 of the MIPL which states that the term of a patent will be of 20 non-extendable years.

Furthermore, a much more agile communication between the COFEPRIS (the Mexican sanitary inspection authority) and the IMPI is necessary, in order to ascertain if a patent should be extended.

The TPP is still being negotiated and the inclusion of patent term restoration and patent term adjustment is not yet a fact. However, the big picture indicates that countries will try to push the IP agenda to protect their interests. The treaty covers all aspects of IP and it is hard to imagine that a country such as Mexico will push for stringent measures regarding appellations of origin without supporting more dynamic IP protection in the general frame.

It is worth noting that every country should step up its efforts in informing the public about the reach and scope of the TPP. The secrecy of the negotiations certainly puts pressure on governments of all the countries involved without an apparent purpose.

For a country like Mexico, patent term restoration and adjustment will undoubtedly put the generic manufacturers to the test. A growing trend shows that innovators are noticing that the generic market is one in which they can compete and thrive, therefore, the opportunity that the TPP presents could push the generics to bring the competition to the innovator’s doorstep.

Mexico will also reap the benefits of increased competition. Biochemical engineers from Mexico’s major schools would be benefited if more research and development occurs in the country. Likewise, endemic diseases would get more attention from Mexican laboratories and would improve the quality of life for the Mexican people.

The TPP is a challenge, but also a huge opportunity for Mexico.

Jose R. Trigueros is a partner at Leyva, Montenegro, Trigueros, Abogados SC. He can be contacted at: jtrigueros@lmt.mx