Overview of the Intellectual Property Chapter of the United States-Mexico-Canada Agreement (USMCA)

On January 16, the Senate passed the United States-Mexico-Canada Agreement (or “USMCA”); an agreement designed to replace and revamp the current North American Free Trade Agreement (or “NAFTA”).  The Intellectual Property Chapter of the USMCA reflects the expansion and refinement of intellectual property rights protections in U.S. free trade agreements (“FTAs”) since NAFTA entered into force in 1993. It is modelled on the provisions of the Trans-Pacific Partnership (“TPP”), and is designed to strengthen the enforcement and protections of IP rights, including patents, trademarks, copyrights, and trade secrets, beyond those provided in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”).  While a number of pharmaceutical-related provisions were deleted or cut back as part of the back-and-forth between the Trump Administration and House Democrats to secure the votes for Congressional approval, a review of the proposed IP Chapter reveals a number of notable provisions affecting IP rights and signals the US’s commitment to strengthening IP rights globally.

Notable Changes in the IP Chapter to the USMCA

The USMCA contains a number of provisions designed to enhance particular IP rights. Listed below are a number of the notable changes contemplated in the USMCA:

1. The USMCA provides a number of new provisions relating to trade secret protection, which are modelled on the U.S. federal Defend Trade Secrets Act (“DTSA”).  The new provisions include the following:

a. Parties are no longer allowed to limit the term of protection for trade secrets; and

b. Judges involved in trade secret litigations are barred from disclosing trade secret information without first allowing the trade secret owner to make submissions under seal in support of their interest in maintaining the confidentiality of the trade secret.

2. The USMCA contains several notable provisions relating to patents, including the following:

a. A definition of “patentable subject matter” that includes new products, processes, and new uses of known products;

b. Provisions requiring patent term adjustments for “unreasonable” delays in the patent prosecution/examination process;

c. Provisions for new notification systems and procedures for asserting patent rights and challenging patent validity; and

d. While the agreement originally provided a 10 year period of market exclusivity for biologic medicines, this was dropped because of objections from House Democrats.

e. In addition, new limits were imposed on the application of patent term adjustment obligations to pharmaceuticals and on the procedures for Mexico’s implementation of the so-called “linkage” provisions of U.S. FTAs, which allow a patent holder to contest applications for marketing approval for a generic version.

3. In addition to new Safe Harbor provisions for Internet Service Providers (“ISPs”) to shield them from liability for copyright infringement, the USMCA includes the following provisions pertaining to copyright protection:

a. New “notice and takedown” procedures to notify ISPs of infringement; and

b. Expanded copyright terms for life of the author plus 70 years and a new provision providing a 75-year term after publication.

4. The USMCA contains a number of provisions regarding trademarks, including provisions extending protection to sounds and scents.  Other notable provisions include:

a. Protections for “well-known” marks, including requirements that marks need not be registered to be considered well-known; and

b. Provisions dealing with Geographical Indications (“GIs”), including procedures to challenge GI applications and cancel others of a GI has become generic or conflicts with a trademark.

c. Provisions impacting domain names including requiring Parties to implement a dispute settlement procedure; provide an online database with the contact information of domain name registrants; and establish remedies for situations when a person in bad-faith registers for a domain name that is identical or similar to a trademark

5. The USMCA also contains industrial design provisions, including:

a. Protection for industrial designs for a term of at least 15 years rather the 10 year minimum in NAFTA

b. Creation of an electronic industrial design system for the application of industrial design rights and a publically available database of protected industrial designs

In addition to IP-specific provisions, the USMCA also contains a number of general provisions designed to strengthen the protection and enforcement of IP rights, such as the following:

1. The USMCA creates a Committee on IP Rights, designed to address a number of IP-related issues including:

a. Approaches for reducing IP infringement and developing stronger border enforcement of IP rights; and

b. Developing systems to recognize and protect Geographical Indications (“GIs”).

2. The USMCA includes stronger IP enforcement provisions, particularly in the areas of copyright, trade secret, and trademark, including requirements that the USMCA Parties adopt expanded criminal penalties for willful trademark counterfeiting, copyright or related rights piracy, satellite and cable theft, misappropriation of trade secrets by state-owned enterprises, and camcording.  The USMCA also provides for ex-officio authority for customs to seize counterfeits infringing copyright and trademark IP rights.

3. The USMCA includes provisions to increase transparency through the online publishing of information such as laws, regulations, and various applications.  While this provision is not binding, it represents an important development in transparency over NAFTA.

Conclusions

While the USMCA has not yet been fully ratified or implemented in the signatory countries, it is expected to enter into force by early summer after USTR undertakes a detailed review of Mexico’s and Canada’s implementation of the USMCA commitments, including their IP obligations, which are a frequent source of implementation complications and delays.  Once it enters into force, the IP Chapter will represent a major improvement and update of the IP provisions in the original NAFTA. 
 

The authors Celine Crowson and David Brzozowski would like to thank Craig Lewis, Warren Maruyama, and Molly Newell for their additional insights on this article.