Trump’s “Big Beautiful Greenland Punitive Taxation Act” – so to speak
Due to insubordinate behaviour and as a disciplinary measure, US President Donald Trump has announced that he will impose additional tariffs of initially (a further) 10% on a number of EU and NATO partner countries and, if they continue to refuse to agree to the acquisition of Greenland to the US, will raise these tariffs to 25%.
As a result, French President Emmanuel Macron has indicated that the EU would also take punitive countermeasures in this case. Specifically, the first-ever use of the so-called „anti-coercion instrument“ has been brought into play. This is a bundle of measures with which the EU can defend itself against economic coercive measures by third parties. In fact, this economic wonder weapon, also nowadays referred to as the „Trade Bazooka“, has never been fired in the history of the EU. And this despite the fact that, exceptionally, a positive vote does not require the unanimity of all members – which is also doubtful in this case – but only a qualified majority.
This blog focuses on current developments in the field of intellectual property law. We are happy to leave the political, especially foreign policy, assessment of current world events to more qualified bloggers. So why this topic today?
In fact, the author stumbled across a news item in one of the relevant print media, which stated en passant that the countermeasures mentioned also included the suspension of protection for patents whose owners – in this case – are either US citizens or companies based in the USA.
Can that be true?
Reason enough to get to the bottom of the matter.
Looking for clues
A first clue leads to a publication by the European Commission dated 8 December 2021 with the concise title
„COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on measures within the Commission’s powers which the Commission can adopt when it determines, pursuant to the Regulation of the European Parliament and of the Council on the protection of the Union and its Member States from economic coercion by third countries, that the Union takes response measures to counteract a third-country measure of economic coercion“ (COM (2021) 774 final).
In just under 1.5 pages, the document essentially explains the instruments that the EU would use to defend itself against coercive measures by third parties. However, it only mentions financial tools, such as the refusal of loans or the suspension of guarantees. There are no comments on patent protection in general and its suspension in particular.
Therefore, there is no way around studying the actual
„REGULATION (EU) 2023/2675 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the protection of the Union and its Member States against economic coercion by third countries,
dated 22 November 2023. Here, in 20 articles and two annexes, it is explained in detail when the aforementioned countermeasures can be applied and which examination steps and approvals are required beforehand. In fact, however, the regulation itself does not list these instruments either. This exciting reading is reserved for Annex I, where, in Section 7, one of 10 measures is actually stated as follows:
„Introduction of restrictions on the protection of intellectual property rights or their commercial exploitation in relation to rights holders who are nationals of the third country concerned, which may amount to a failure to comply with applicable international obligations regarding trade-related aspects of intellectual property rights.“
In line with TRIPS?
The knowledgeable reader will immediately ask whether such a measure is TRIPS-compliant, i.e., can a member state of the WTO that has signed the TRIPS Agreement suspend the patent protection of another member state for the area of effect of its own territory? If so, under what circumstances, for what period of time and possibly also retroactively?
The question is further complicated by the fact that the suspension is apparently intended to apply to the entire EU, but – at least as things stand today – only parts of the EU would be affected by the punitive measures. So, all for one – one for all?
A basis for the suspension of patent protection is provided by Article 8(1) of the TRIPS Agreement, which reads:
“Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.”
The suspension of patent protection is not mentioned here literally, but members are granted the right to take protective measures not only in areas of public health and nutrition, but also in areas of economic or technological importance, provided that these measures are consistent with the provisions of the Agreement.
Even if one were willing to understand the suspension of patent protection as falling under the umbrella term of an „appropriate measure“, the question arises as to whether (a) a causal link between the measure and the desired result – i.e., the withdrawal of punitive tariffs – can be established and (b) whether the measure is consistent with TRIPS.
At least as far as the second point is concerned, one must be sceptical, because the purpose of TRIPS is to agree on binding minimum standards for the protection of intellectual property, not to make IP a political football. If the EU were to fire the bazooka and target patent protection in the process, this could end in a lawsuit before the WTO, which would probably be difficult to win. However, as to turn the POTUS language against him: Who cares?
There are also doubts about the usefulness of such a measure in terms of efficiency: suspending patent protection – which would probably come to an end at some point – would certainly not result in companies in the EU making mass use of protected US technology out of the blue. It could, however, have consequences for ongoing infringement proceedings involving patentees from the US. For such cases, it can be assumed that the proceedings would simply be suspended, rather than being terminated.
In summary, it must therefore be concluded that the EU’s trade bazooka in terms of suspending patent protection for US companies could be a dud. It is to be hoped that the other economic countermeasures being considered show more impact.