International: Changes to NAFTA Intellectual Property Provisions in The USMCA

International: Changes to NAFTA Intellectual Property Provisions in The USMCA

Introduction

To foster a global trade environment, countries worldwide are revising their national trade agreements following international standards. One of the most critical aspects that need to be considered while doing so, is creating a cogent interrelationship between goods & services with Intellectual Property.

Countries worldwide are adopting international and regional free trade agreements in furtherance of their objective of strengthening trade relations with their neighbors. One such trade agreement is NAFTA; the signatories of NAFTA include the US, Canada, and Mexico. After over a year of negotiations, these countries agreed to replace and amend NAFTA with the USMCA.

Background

In 1994, the US, Mexico, and Canada entered into a free trade agreement called the North American Free Trade Agreement, popularly known as NAFTA. As per negotiations between the three states, NAFTA was proposed to be replaced by the USMCA (US-Canada-Mexico Agreement) as their new free trade agreement, with amended terms. The most notable changes proposed through this agreement were concerning intellectual property provisions, specifically Artificial Intelligence. In the US, the first agreement recognized was NAFTA, followed by the WTO ad TRIPS Agreements.

Intellectual Property has always been of crucial importance for the US since it provides a comparative advantage in trade for the country. US has been undertaking IPR protection activities with a dual motive, firstly, to obtain global IPR protection and secondly, to facilitate trade negotiations in the international sphere of commerce.

The importance of these trade negotiations and agreements may be reflected in aims and objectives to counteract cyber theft and protect trade secrets. Further, considering that the US conducts a vast array of IP intensive trade activities with its neighboring states, i.e., Canada and Mexico, it was evident that there arose a need to renew these countries' trade and IPR policies harmoniously.

The Chapter on IPR aims to achieve the following objectives;

1. Provide support to technological innovations to benefit producers as well as consumers
2. Facilitate balancing of rights and liabilities of producers and consumers
3. Creating better means of enforcement through government to government dispute settlement
4. Providing a means to integrate international agreements with national and domestic laws
5. Introducing non-discriminatory policies concerning foreigners on IPR

Important Changes in Provisions

The USMCA constitutes 34 Chapters and 12 Side Letters. The provisions enumerated hereunder cover a wide range of topics: agriculture, rules of origin, dispute resolution, and e-commerce. Further, some chapters have been added and updated to include competition policies, MSMEs, telecommunication, and intellectual property to modify and modernize trade between the parties.

In this article, our main aim is to focus on the notable changes made in intellectual property.

At the very outset, the terms of NAFTA were negotiated in the years 1991 to 1993, which means that its relevance over the years has diminished significantly. Considering that the internet and the concept of trade secrets in intellectual property were still in a state of infancy at the time, the attention given to the effect of these factors in the international sphere has been negligible.

Therefore, a need arose to amend the provisions thereof to reflect innovations taking place internationally in intellectual property. In December 2019, To accommodate this change, the USMCA Protocol amendment was brought about to include concepts and inventions that were omitted in the previous agreement and recent trends and changes.

The fundamental changes are as follows;

I.         IP Rights Committee

One of the notable changes brought about by the USMCA is the establishment of a committee dedicated to dealing with intellectual property at length. The committee’s obligations may include;

1. Exchange necessary and requisite information between the states
2. Strengthen cross border enforcement of IP rights
3. Consider issues relating to trade secrets and procedural fairness in IP litigation.
4. Mediate disputes between parties in issues of geographical indications
5. Schedule meetings on behalf of the states 

II.         Copyright and Trademark protection

The USMCA has extended the period allotted to copyrights and trademarks to 70 years after the author's death. For example, in Canadian law, the term granted for copyright protection is 50 years after the death of the author. However, as per the USMCA, the term of protection must be at least 75 years when the work was first published or 70 years after the remainder of the year of creation.

Under NAFTA, the protection granted was only for 50 years after the death of the author.

In the case of trademarks also, the protection granted has been exceeded, wherein initial registration has been granted for ten years, concerning which it is the responsibility of the state to maintain an electronic record of their trademark applications.

III.        IP Enforcement Procedures

In the digital age, IP becomes even more susceptible to infringement; therefore, there is a need to make procedures available to enforce IP Rights in the digital environment. This includes an obligation to provide effective and expeditious measures to take action against copyright infringers. Further, it is essential to explicitly make these infringers liable to criminal penalties. The USMCA aims to bring each state party's regional and national laws to the agreement under a blanket system.

IV.        Trade secret protection

Although NAFTA addressed the concept of the trade secret, drafters did not emphasize much on the extent thereof. However, in the subsequent years, considering the importance and growth of trade secrets, there is a need to protect these rights, especially in a high-tech society.

To keep proprietary information about an invention under wraps, any business owner would choose protection under trade secrets rather than patents. The provisions related to trade secrets include;

1. Non-disclosure of confidential information in the court of law
2. Criminal penalties for willful misappropriation of trade secrets
3. Procedures and penalties in cases of cyber theft by state-owned enterprises

V.         Term of patents

The USMCA aims to define the patentable subject matter. Previously, the USMCA recognized and protected new uses, methods, and processes of existing products. However,  the amendment eliminates the aforesaid now.

The USMCA includes adjustment of patent terms in case of delays in the issuance thereof in receiving approvals and examination. The provision explicitly mentions the term "unreasonable delay" which means delay of more than five years from the date of filing or three years after applying for the examination, whichever is later.

The USMCA also provides for expanding the scope of exclusivity for biological drugs for at least ten years.

VI.       Cross border issues

Under the revised agreement, custom officials' authority shall be increased on several levels, including the power to initiate border measures against suspected counterfeit trademark and copyright goods, whether imported, exported, or are in transit.

As per the previous agreement, goods in transit could not be seized and were off-limits; now, this restriction has been removed. The revised agreement also gives customs officials the authority to inspect, detain or destroy any suspicious goods that may be perceived to be counterfeit or pirated. Such action is not necessarily supposed to be following court orders.

VII.      Domain names

The USMCA provides for creating a dispute mechanism for the protection of domain names based on the principle of the Uniform Domain Name Dispute Resolution Policy for domain registration. The USMCA also provides for remedies regarding issues of transfer and cancellation, registration to deceive, etc.

Further, the revised agreement also lays down the need to have an online public forum of reliable database which contains contact information for domain name registrants subject to policies and personal data.

Conclusion

In light of the aforesaid, the USMCA aims to cover a wide range of issues, and it further aims to focus its attention on the evolutionary aspect of intellectual property, considering its growth in recent years. Since the WTO and TRIPS agreement cannot be modified according to national and regional requirements, parties to the USMCA have taken a step in the right direction by amending the provisions under their provincial and territorial laws to modernize the approach as per current trends.