[Ip-health] Globe & Mail: Canada must learn from NAFTA legal battles
Michael H Davis
m.davis at csuohio.edu
Mon Nov 25 07:15:51 PST 2013
Well they may be investments but the Supreme Court has been skeptical about calling patents "property"and I would think that's enough to put an end to this nonsense.
Or, of course, we (or more appropriately Canada and Mexico) could roll back NAFTA and TRIPS to pre WTO days. Or we could just repeal TRIPS as violative of international law.
"Baker, Brook" <b.baker at neu.edu> wrote:
November 24, 2013
Canada must learn from NAFTA legal battles
By BARRIE McKENNA
U.S. companies are using a NAFTA dispute mechanism to sue Ottawa for new regulations, relying on a clause originally intended to serve as safeguard against Mexican nationalism
With a wary eye on Mexico, the drafters of 1994's North American free-trade agreement gave investors a powerful weapon to sue governments.
The worry at the time was that Canadian and U.S. investors needed extra tools to protect against discrimination from unfair and opaque laws in Mexico, a country with a history of nationalizing industries. Thus, NAFTA's Chapter 11 was born.
It hasn't quite worked out the way many experts thought.
Now it is Canada that is the top target of NAFTA investor-state litigation. This country faces eight active NAFTA investment claims, all launched by U.S. companies. If successful, the claims could cost Canadian taxpayers more than $2.5-billion.
There are only three other ongoing cases, two against Mexico and one against the United States.
These disputes aren't just about governments physically seizing corporate assets or nationalizing foreign companies.
Chapter 11 has become a way for companies either to bypass domestic courts and regulatory agencies, or to get restitution denied through normal channels.
And with each new claim, companies are cleverly stretching the bounds of what they consider an investment. The same goes for expropriated property, which claimants now argue should extend to import permits, drilling rights and patent rulings.
This trend in NAFTA litigation could have profound implications for Canada as it readies for a new generation of free trade deals, including the Trans-Pacific Partnership and the just-completed European Union negotiations. In spite of the slew of recent Chapter 11 cases filed against Canada, Ottawa pushed for an investor-state dispute mechanism in the European free-trade deal. Similar provisions are expected to be in the TPP, vastly expanding the number of potential disputes.
One of the most intriguing Chapter 11 cases is a $500-million claim by U.S. drug giant Eli Lilly & Co. The company alleges that Canada expropriated its property when courts invalidated patents on two of its drugs – attention deficit disorder treatment Strattera, and Zyprexa, an anti-psychotic. These decisions allowed generic versions of the two products to come on the market sooner, thereby depriving the company of profits and market share.
Eli Lilly isn't arguing that it was treated differently under Canadian law than other domestic companies. Rather, it's making the case that it deserves to be treated by the same standards as it would be in the United States and Europe.
Brook Baker, a law professor at Northeastern University in Boston, calls this argument a "topsy-turvy" interpretation of so-called national treatment.
"Under the logic of Eli Lilly's investor-state claim, foreign investors' expectations have become unbound," Prof. Baker writes in a recent issue of Investment Treaty News. "Eli Lilly hitches its investment expectation to the best deal on [intellectural property] achieved anywhere [in the world]."
Another U.S. company, Lone Pine Resources Inc. of Wilmington, Del., is suing the Canadian government for $250-million over Quebec's decision to ban natural gas fracking under the St. Lawrence River. The moratorium, put in place while the province studies the safety of hydraulic fracturing, applies to all companies, foreign or domestic.
Lone Pine, headquartered in Calgary but registered in Delaware, argues that the ban is political and amounts to an illegal expropriation of the money it has invested.
Canadian generic drug maker Apotex Inc. is similarly using Chapter 11 in a case that would greatly expand the notion of what constitutes an investment. At issue are decisions by the U.S. Food and Drug Administration to temporarily cut off imports from two Toronto-area plants after inspections that turned up manufacturing problems. Apotex is claiming damages of $520-million (U.S.) in the case, equating earlier U.S. import approvals to "investments."
None of these three claims has been validated by a tribunal decision.
But they highlight the ever-widening scope of what claimants consider investments and expropriation.
Everything, it seems, is an investment. And almost any adverse regulatory or court decision is tantamount to expropriation, regardless of whether foreign companies are being treated differently than domestic ones.
This all seems a very long way from the original intent of the NAFTA architects.
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