Intellectual Property and the Free Trade Agreements: Information Policy Issues

Innovation and Economic Growth, Intellectual Property and Patents

Article Snapshot

Author(s)

John R. Thomas

Source

Washington, DC: Congressional Research Service, 2005

Summary

This article attempts to analyze the current use of Free Trade Agreements to create uniform intellectual property laws.

Policy Relevance

Congress will need to monitor future Free Trade Agreement negotiations in order to ensure both that the U.S. is not abusing its bargaining position and that they are not preventing future patent reform.

Main Points

 
  • A Free Trade Agreement (FTA) is a deal between two or more countries to allow trade between them without application of additional taxes, tariffs, or other costs. Essentially, a FTA allows countries to participate in limited international trade as if it were trade within the same country.
     
  • Following the Trade Promotion Act of 2002, the United States has engaged in a series of FTAs. As part of these FTAs, the United States has pressured other countries to match current U.S. patent laws if they wish to participate in the FTA.
     
  • Other countries matching U.S. patent laws benefits the United States by preventing international patent piracy. Patent piracy occurs when individuals use patented technology without licensing or paying the individual who holds the patent. In countries with weak patent laws, patent piracy may not be illegal.
     
  • However, in recent years, the U.S. policy of including patent law regulation in FTAs has been criticized for a number of reasons.

    • Some commentators have suggested that the use of U.S. patent laws in FTAs will prevent other patent reforms from taking place in the U.S.
       
    • Others are concerned that under current World Trade Organization (WTO) agreements it may be necessary to extend to all member nations the benefits offered to one member nation. This would result in a single FTA granting trading benefits to every WTO nation.
       
    • Finally, some observers worry that the U.S. is using its powerful bargaining position to force patent compliance on economically disadvantaged countries.
       
  • Despite these objections, it may be in the best interest of both the U.S. and other countries to institute uniform patent laws.

    • Uniform laws allow for easier international contracting and trade.
       
    • Strong patent laws in developing countries may encourage technological development and innovation.
       
    • Other countries can use patent reform as a bargaining chip when negotiating for better FTA terms.
       
  • Because of the potential pitfalls of continuing to use FTAs to advance the intellectual property interests of the United States, it is important that Congress continues to closely monitor both the regulation of the FTAs already in existence, as well as new FTAs.

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