TPP a threat to knowledge and innovation

Medicine appears to have dominated the intellectual property discussions in the TPP. Photo / Thinkstock

Trade and investment may be winners but intellectual property could suffer if the deal adopts US rules.

My son who works in IT has been furious with John Key - truly scathingly furious - for pursuing the Trans-Pacific Partnership. Jared is a "solutions architect", or was when he worked for a software firm in Auckland. A previous employer in Melbourne has recently hired him back.

He hates the prospect of the TPP with a passion because, he told me, software developers already have to waste too much time and money fighting off idle patent suits from the United States. The idea of adopting an intellectual property regime along US lines fills him with disgust.

It is the one thing that worries me in all the elements of the big trade and investment agreement said to be nearing completion at talks in Hawaii this week. Innovation is seldom easy to define. Knowledge should never be a restricted property and its applications should not be patentable, I think, unless they take the form of a specific branded product directly attributable to an investment in original research and development.

It should not be possible to be granted patents and copyright in anticipation of developments. The idea of rent-seeking speculators investing only in patent lawyers to prey on others' investment in creative work is truly frightful. But then, so is the idea of mega uploads.

The world is long overdue for enforceable rules against internet piracy and the US has a great deal to gain from any law and order that an international agreement might bring to this frontier. Its national interest rests on creativity and innovation as much as property rights. The next marvel in everything from medicine to music is likely to come from America.

Medicine appears to have dominated the intellectual property discussions in the TPP. It sounds like a deal is going to extend pharmaceutical manufacturers' patent rights somewhat. Key said this week Pharmac will probably have to pay a bit more for the drugs we get on prescription.

If that is the worst of the deal for us, it could have been much worse. US pharmaceutical giants were said to be out to break Pharmac's ability to bargain on the price the state must pay for the medicines it subsidises. That would be an outrage.

As would be a ban on parallel importing. Manufacturers don't get to impose different prices on different countries in a free trading world.

The TPP promises to be an ambitious treaty, writing agreed rules for trade, investment, intellectual property, state purchasing and much else. The signatories may be confined to countries on the Pacific rim but with the US and Japan in it, the whole world is watching.

The investment regime may turn out to be its greatest contribution to the region's prosperity. If it gives investors robust rights to sue governments for decisions that devalue their investment it will reduce their risk and encourage more capital into the Pacific rim.

Governments will probably have little to fear if decisions that are taken for reasons such as public health and the environment are evidence-based and necessary for their purpose. Plain pack cigarettes might struggle to pass that test, as would environmental steps taken purely on the precautionary principle.

The TPP is not going to produce the "gold standard" for agriculture New Zealand wants but the potential will always be there. The terms of the TPP are likely to be a code of reference for all business across national borders.

The guiding principle, as in all free-trade agreements, is non-discrimination between foreign and domestic competitors. It is a simple proposition but a hard sell to the citizens of all countries. Just about everybody instinctively wants to favour their own.

Key said this week the TPP could forbid barriers to foreign investment even in residential property. That is counter-intuitive for me too, but it probably is in the national interest that Auckland's residential real estate is priced at its world value. The TPP will not stop us taxing it more effectively.

It will be a relief to see the text at last. Opponents of free trade have talked themselves and others into a terrified state, mainly because these things need to be negotiated behind closed doors. But there has been information on the web.

On intellectual property, for example, the Government made it known it was facing pressure for more prescriptive and less flexible patent enforcement rules than we have in our existing free-trade agreements. Australia, Chile and Singapore have conceded these in their previous deals with the US.

On most of these issues at the TPP, the US and Japan were siding against the rest. The US because it is innovative and Japan because it is not. It may turn out to be their deal. We'll see.

There is going to be a great deal to see and debate. Can't wait.