Worldwide: Key IP Takeaways From The United States-Mexico-Canada Agreement

On September 30, 2018, the United States, Mexico and Canada reached a trade agreement to supersede the North American Free Trade Agreement. The aptly named United States-Mexico-Canada Agreement includes intellectual property provisions covering patents, trademarks, copyright, trade secrets and domain names. USMCA Chapter 20, which contains the intellectual property-related portion of the agreement, is based in part on the abandoned Trans-Pacific Partnership, maintains some NAFTA provisions and includes entirely new ones. Although the agreement awaits ratification in all three countries, the general consensus among intellectual property owners that is it is an improvement over prior trade agreements.

Longer Terms of Protection

One of the most notable aspects of the USMCA intellectual property provisions are longer terms of protection. Under the USMCA, patent holders are entitled to term adjustments when a patent registration is delayed due to circumstances outside the applicant's control, triggered when the patent issues more than three years after an examination request is filed, or more than five years after the application was initially filed. This has been the law in the United States for decades but is new to Canada, which has four and a half years to implement it.

The protection term specifically for biologics — pharmaceuticals synthesized from biological sources — has also been extended. Under the USMCA, the term is 10 years, versus five years under the TPP and eight years in Canada (the United States currently provides 12 years of protection). Biologics were not covered at all under NAFTA, nor are they specifically covered by Mexican law.

Similarly, the USMCA extends the required copyright term in Canada to match the existing U.S. term — the life of the author plus 70 years — up from life of the author plus 50 years. In Mexico, the copyright term is already longer — the life of the author plus 100 years.

Enhanced Enforcement Mechanisms

In addition to longer terms of protection, the USMCA provides for enhanced intellectual property enforcement mechanisms. Taking a page from the Digital Millennium Copyright Act in the United States, the USMCA implements a notice and takedown procedure requiring Internet Service Providers to remove infringing content from their platforms in order to avoid copyright infringement liability. Canada may be exempt from this provision due to certain legislative intricacies. As a result, Canadian ISPs may only be required to notify users of infringement allegations (and will not be required to remove infringing content). Mexico, though, will need to create such a system. The TPP contemplated a similar provision, but NAFTA does not contain any similar provisions.

Further, the USMCA addresses technological protection measures intended to protect copyright content, listing certain types of activities that circumvent such measures, but are nevertheless deemed lawful. The TPP included a similar list, but the USMCA is more narrowly tailored.

In counterfeiting actions, the USMCA requires signatories to impose predetermined damages. (The United States already has statutory damages for counterfeit cases of $1,000 to 200,000 per mark, and up to 10 times that for willful counterfeit use, and provides for stronger rights for taking action at the borders against counterfeit trademark or pirated copyright goods. For example, border officials are authorized to use their own judgment to identify counterfeits (no court order is required) and may unilaterally seize or destroy such counterfeits.)

Trademark and Patent Provisions

The USMCA contains a number of provisions related to trademark protection, most of which are consistent with U.S. law. Canada was already implementing such changes with the new Canadian Trademarks Act that will likely come into force in early 2019. These include: (1) ratifying the Madrid Protocol; (2) adopting a classification system consistent with the Nice system and (3) permitting registration of scent marks. One outstanding requirement that Canada will still need to address is allowing the registration of collective marks (marks used by an association to certify membership or compliance with certain criteria). Mexico has already complied with these requirements.

As with trademarks, the USMCA imposes patent requirements that are already largely consistent with the existing laws in the United States and Canada. For example, the parties must either accede to the international patent agreement known as the Patent Law Treaty, to which the United States is already a member, or adopt procedures consistent with the "objectives" of the Patent Law Treaty. Canada has already amended its domestic laws to comply with the Patent Law Treaty, and those changes are predicted to come into effect in early 2019, but Mexico will have to amend its domestic law to comply with this provision.

Trade Secrets, Domain Names and a Committee on IP Rights

Trade secret protection under the USMCA is similar to NAFTA, and requires that signatories have laws in place to protect trade secrets modeled after Uniform Trademark Secrets Act in the United States. Term limits on trade secret protection are prohibited, as are restrictions discouraging or impeding the voluntary licensing or transfer of trade secrets. Unlike NAFTA and the TPP, the USMCA addresses how trade secrets are handled in litigation, requiring parties to allow submissions under seal to prevent disclosure.

Domain names are likewise covered by the USMCA, which requires the signatories to maintain an online database of domain name registrant contact information, and a domain name dispute mechanism modeled after the Uniform Dispute Resolution Policy, which the United States and Canada already have. The TPP text contained similar provisions, but NAFTA did not.

Finally, in addition to the requirements enumerated in the agreement, the USMCA establishes a Committee on IP Rights, which will be comprised of government officials from each country and tasked with "identify[ing] appropriate opportunities to increase cooperation between the Parties on trade-related intellectual property rights protection and enforcement." Neither NAFTA nor the TPP included a similar provision.

Given that the agreement must pass through each party's ratification procedures, it could be many months or even years before it is in force. Once the USMCA takes effect, it requires that the countries re-evaluate the agreement every six years, and it also contains a 16-year sunset clause, requiring the parties' agreement to extend.

To learn more, see the full text of the agreement and the Trump administration's summary.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.