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DEEPLINKS BLOG

Leaked TPP Investment Chapter Reveals Serious Threat to User Safeguards

April 1, 2015

A newly leaked chapter of the Trans-Pacific Partnership (TPP) agreement from Wikileaks has confirmed some of our worst fears about the agreement. The latest provisions would enable multinational corporations to undermine public interest rules through an international tribunal process called investor-state dispute settlement (ISDS). Under this process, foreign companies can challenge any new law or government action at the federal, state, or local level, in a country that is a signatory to the agreement. Companies can file such lawsuits based upon their claim that the law or action harms their present or future profits. If they win, there are no monetary limits to the potential award.

This type of tribunal process is not entirely new—similar provisions in other international agreements have been used to undermine laws regarding the environment, health, and other regulatory areas. However, this new leaked text has revealed how these investor-state provisions could also be used to undermine user protections built into digital regulations, including copyright rules.

The TPP Investment chapter encompasses intellectual property in its definition of foreign investment, including all "other tangible or intangible, movable or immovable property." In this way, it is similar to ISDS provisions in other trade agreements, including the North American Free Trade Agreement (NAFTA). Under NAFTA, pharmaceutical giant Eli Lily, took advantage of this broad definition to target a Canadian court ruling that found one of its patents invalid. They are demanding Canada give them $500 million in damages, claiming that Canada has "expropriated" their property through this decision. This is one of the few, if only, known cases where an investor-state case has been filed over a patent issue. Since policymakers now always seem to group together patents, copyrights, trademarks, and other kinds of intangible "property" together, it is not a far leap for Big Content companies to feel emboldened by this patent case to begin undermining user rights in copyright law as well.

But there's something particularly sinister about the TPP's version of ISDS. Article II.7(5) is the provision on how ISDS applies to intellectual property issues, it reads:

The Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights in accordance with the TRIPS Agreement, or to the revocation, limitation, or creation of intellectual property rights, to the extent that such issuance, revocation, limitation, or creation is consistent with Chapter QQ._ (Intellectual Property Rights) and the TRIPS Agreement.

In the footnote to this text, it says the use of "limitation" in this provision also include exceptions to copyrights. At first it seems like the purpose of this language is to prevent investor-state courts from making determinations on how countries enact intellectual property rules. But the last part of this provision is the hitch. It specifies that the ISDS provisions do not apply to copyright and patent rules as long as those rules are "consistent with" the TPP's Intellectual Property chapter and the TRIPS agreement.

Who decides whether the country's rules are consistent with the TPP? The ISDS court itself is the one who makes that determination. This means that the agreement gives the ISDS court the ability to interpret national compliance with the provisions of the TPP, a dangerous proposition given the partisan nature of ISDS courts. These tribunals are usually comprised of three private-sector attorneys who take turns being the judge and the corporate advocate.

This is what happened with the Eli Lily case, and what can happen to fair use in the United States and other exceptions and limitations to copyright in the other 11 TPP countries. If Hollywood, or for that matter any entertainment industry group, doesn't like a court's ruling in favor of fair use protections, or if a legislature in another country votes for a permanent exception to copyright, they could file an ISDS claim saying that this new rule violates the terms of the TPP. Specifically, they could say that they have violated the three-step test, which is language in the TPP that restricts, rather than promotes new exceptions and limitations to copyright.

It is especially disturbing given rightsholder groups' years long war against fair use in the United States, Australia, and abroad. Nowhere is this more glaring than at the World Intellectual Property Organization (WIPO), where Hollywood and other big content lobbyists fought tooth and nail to prevent the passage of the first international treaty for a copyright exception to help people with visual disabilities gain access to books. Representatives of the U.S. and EU at WIPO are still fighting new exceptions for libraries. This is despite growing evidence that flexible copyright exception systems, like fair use, are integral to enabling free expression, innovation, and access to knowledge. A recent paper has found that they lead to higher rates of growth for countries' overall economies—which is not surprising given how fair use has enabled so many new technology businesses to flourish.

But the threat of ISDS on user rights does not stop with fair use. Due to the vague language of the TPP's copyright provisions, big content groups could attack any of the TPP countries' interpretation of the copyright provisions, especially if they were more protective of users' rights. A multinational movie studio could sue a country that introduces new rules, like those that Chile already has, requiring a judicial order before someone can be forced to remove content from a website. They could claim that this is inconsistent with the TPP and that it has caused them to lose profits from illegal piracy. Or a major video game producer, like Sony, could sue a country if they enacted a new permanent exemption to circumvent DRM—such as for third party repairs of their game consoles or for people to modify games for personal use. These ISDS provisions could invite these and other onerous challenges to user protections in all 12 TPP countries.

How have such provisions, which confer expansive powers on corporations and undermine democratic rules, materialize in the first place? The policy was originally intended to prevent foreign assets from being illegally expropriated by “rogue” governments in developing countries. ISDS began to appear in treaties as a way to encourage foreign investments, by giving investors this new right of arbitration to challenge governments if things went wrong. But what began as a remedy to a specific problem has since been co-opted to serve very different objectives. Now, multinational corporations have been filing dozens of ISDS suits every year, with 57 cases filed in 2013 alone.

Dozens of civil society groups from around the world working on all kinds of diverse causes have come out to denounce the TPP's investor-state provisions. That's because ISDS provisions pose a threat to any law that is designed to protect the public interest. ISDS is an affront to democracy itself—but the U.S. Trade Representative (USTR) wants to convince the public otherwise. Which is why they have since come out with a FAQ page on ISDS issues that is full of misinformation. If we want to make sure users keep, and gain more autonomy over the Internet and over our own devices, we cannot let such a secretive, corporate-driven agency to pass digital regulations in secret.

If you're in the United States, urge your lawmakers to call a hearing on the contents of the TPP that will impact your digital rights, and more importantly, to vote this deal down when it comes to them for ratification:

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