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Updated January 6, 2020


USMCA: Intellectual Property Rights (IPR)


The United States-Mexico-Canada Agreement (USMCA) is
a proposed free trade agreement (FTA) negotiated among
the three parties to update and replace the 1994 North
American Free Trade Agreement (NAFTA). On November
30, 2018, President Trump and the leaders of Mexico and
Canada signed USMCA. Congress would need to pass the
legislation to implement the agreement before it can enter
into force. On December 10, 2019, the three countries
agreed to a protocol of amendment to the USMCA, which
affects some IPR provisions.
USMCA would make notable changes to NAFTA
provisions on intellectual property (IP)-creations of the
mind embodied in physical and digital objects. IPR are
time-limited rights that governments grant to inventors and
artists to exclude others from using their inventions and
creations without permission. IP is a key source of U.S.
comparative advantage; advancing IPR protection globally
has been a U.S. trade negotiating objective since 1988 (P.L.
100-418). IPR trade agreement provisions were first
included in NAFTA and, subsequently, the World Trade
Organization (WTO) Agreement on Trade-Related Aspects
of Intellectual Property Rights (TRIPS). The 2015 Trade
Promotion Authority (TPA, P.L. 114-26) retains prior U.S.
trade negotiating objectives for U.S. trade agreements to
reflect a standard of protection similar to that found in
U.S. law (TRIPS-plus), and adds new objectives to
combat cyber theft and protect trade secrets.

         Select IPR Provisions in USMCA
Several provisions in USMCA reflect new or updated issues not
in current U.S. FTAs, including the following:
Internet Service Providers (ISPs). Establishes flexibilities to
address ISP copyright liability.
Geographical indications (GIs). Requires administrative
procedures for recognizing and opposing GIs, which protect
distinctive products from certain regions, including guidelines for
determining common names. Also includes transparency and
due process procedures for GIs that parties protect throughl
international agreements.
Trademarks. Extends trademark protection to sounds and
collective marks and removes administrative requirements to
enable easier trademark protection and enforcement.
Trade secrets. Requires criminal procedures and penalties for
trade secret theft, including cyber theft; clarifies that state-
owned enterprises must protect trade secrets.
Enforcement. Extends IPR enforcement to the digital
environment.

IP-intensive goods and services are an important part of
U.S. trade with Canada and Mexico. The United States has
expressed concern over certain IPR policies in both
countries in recent years.


The IPR chapter aims to support technological innovation
to benefit both producers and users, while promoting a
balance of rights and obligations. It is enforceable through
government-to-government dispute settlement. General
obligations include upholding international agreements and
providing national treatment-not discriminating against
foreigners on IPR. Some provisions in the IPR chapter have
phase-in periods for Canada and Mexico. (IPR issues also
arise in the USMCA investment chapter; as a form of
investment, IPR benefits from USMCA investor
protections. See CRS In Focus IFi 1167, USMCA:
Investment Provisions, by Christopher A. Casey and M.
Angeles Villarreal.)

Patents protect new inventions, such as pharmaceutical
products, chemical processes, business technologies, and
computer software. USMCA defines patentable subject
matter as new products and processes. Patent protection for
new uses, methods, or processes of a known product were
included in the USMCA, but were removed by the
amendment. Under TRIPS, patented inventions must
receive a minimum term of 20 years of protection. USMCA
requires adjustments of patent terms for unreasonable
delays in the patent examination or regulatory approval
processes. Unreasonable delays include a delay of more
than five years from the date of filing or three years after a
request for examination of an application, whichever is
later.
USMCA includes a notification system and procedures
(e.g., judicial or administrative proceedings) to assert patent
rights or to challenge a patent's validity. These procedures
are more flexible than patent linkage a provision
common to many prior U.S. FTAs whereby regulatory
authority cannot grant marketing approval to a generic drug
without the patent holder's penmission.


Some USMCA provisions specific to pharmaceuticals aim,
based on U.S. trade negotiating objectives, to encourage
innovation and access to medicine. Yet debate exists on
whether USMCA appropriately incentivizes research and
development for new medicines while also allowing
affordable access to medicines through market entry of
generic medicines. In USMCA, the debate has centered on
regulatory exclusivity for biologic drugs drugs made
from living organisms (see figure below).
Unlike most patented products, pharmaceuticals must go
through a regulatory approval process before they can be
marketed. Patent holders (generally, brand-name drug
companies) must submit test data) to the regulatory
authority the Food and Drug Administration (FDA) in the
United States to make the case for a drug's safety and
effectiveness. The market approval process runs

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