01 May 2018

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USTR 2018 Special 301 Report Puts India in Priority Watch List Piracy Report

USTR Releases 2018 Special 301 Report Puts India in Priority Watch List IP Piracy Report
The Special 301 Report is an annual review of the global state of IP protection and enforcement. An important part of the mission of the Office of the United States Trade Representative (USTR)
is to support and implement the Administration’s commitment to protect American jobs and workers and to advance the economic interests of the United States.

In 2010, USTR began publishing annually the Notorious Markets List as an Out-of-Cycle Review separately from the annual Special 301 Report. The Notorious Markets List identifies illustrative  examples of online and physical markets that reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial copyright piracy and trademark counterfeiting, according to information submitted to USTR in response to a notice published in the Federal Register requesting public comments.

In 2017, USTR requested such comments on August 16, 2017, and published the 2017 Notorious Markets List on January 11, 2018. USTR plans to conduct its next Out-of-Cycle Review of Notorious Markets in the fall of 2018

The Special 301 Report (Report) is the result of an annual review of the state of IP protection and enforcement in U.S. trading partners around the world, which the Office of the United States Trade Representative (USTR) conducts pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988, the Uruguay Round Agreements Act, and the Trade Facilitation and Trade Enforcement Act of 2015 (19 U.S.C. § 2242).

In preparing the Report, substantial information was solicited from U.S. embassies around the world, from U.S. Government agencies, and from interested stakeholders. The draft of this Report
was developed through the Special 301 Subcommittee of the interagency Trade Policy Staff Committee.

The Office of the United States Trade Representative (USTR) released the 2018 Special 301 Report, identifying trading partners that do not adequately or effectively protect and enforce intellectual property (IP) rights or otherwise deny market access to U.S. innovators and creators that rely on protection of their IP rights.

The Report calls on U.S. trading partners to address IP-related challenges with a special focus on the countries identified on the Watch List and Priority Watch List. This Report draws attention to IP-related trade barriers and the steps foreign countries can take to open their markets to IP-intensive goods—steps that help to protect U.S. jobs, create opportunities for job growth, and promote free and fair trade that benefits all Americans.

Significant elements in the 2018 Special 301 Report include the following:

USTR identified 36 countries on the Priority Watch List or Watch List.

Trading partners on the Priority Watch List present the most significant concerns this year regarding inadequate or ineffective IP protection or enforcement or actions that otherwise limit market access for persons relying on IP protection.

USTR identified 12 countries—Algeria, Argentina, Canada, Chile, China, Colombia, India, Indonesia, Kuwait, Russia, Ukraine, and Venezuela—on the Priority Watch List. The IP issues in these countries will be the subject of intense bilateral engagement during the coming year.

USTR also identified 24 trading partners on the Watch List:Barbados, Bolivia, Brazil, Costa Rica, Dominican Republic, Ecuador, Egypt, Greece, Guatemala, Jamaica, Lebanon, Mexico, Pakistan, Peru, Romania, Saudi Arabia, Switzerland, Tajikistan, Thailand, Turkey, Turkmenistan, the United Arab Emirates, Uzbekistan, and Vietnam.IP challenges in these countries also merit increased bilateral engagement in 2018-2019.

China is on the Priority Watch List for the 14th consecutive year. Longstanding and new IP concerns merit increased attention, including China’s coercive technology transfer practices, range of impediments to effective IP enforcement, and widespread infringing activity—including trade secret theft, rampant online piracy, and counterfeit manufacturing.

USTR identifies India on the Priority Watch List for lack of sufficient measurable improvements to its IP framework on longstanding and new challenges that have negatively affected U.S. right holders over the past year. Longstanding IP challenges facing U.S. businesses in India include those which make it difficult for innovators to receive and maintain patents in India, particularly for pharmaceuticals, enforcement action and policies that are insufficient to curb the problem, copyright policies that do not properly incentivize the creation and commercialization of content, and an outdated and insufficient trade secrets legal framework. New and growing concerns, including with respect to reductions in transparency by India’s pharmaceutical regulator through the removal of a requirement that applicants submit information about a product’s patent status, as well as positions that India supports and voices in multilateral fora on IP issues, continue to  generate skepticism about whether India is serious about pursuing pro-innovation and - creativity growth policies

U.S. innovators face challenges including restrictive patentability criteria that undermine opportunities for export growth in countries such as Argentina, India, and Indonesia.
Innovators also face—for example in Argentina, China, India, Indonesia, Saudi Arabia, Thailand, and Russia—a lack of adequate and effective protection for regulatory test or other data submitted by pharmaceutical and agricultural chemical producers.

USTR highlights engagement with trading partners to address concerns related to IP protection and enforcement and market access barriers with respect to pharmaceuticals and medical devices so that trading partners contribute their fair share to research and development of new treatments and cures. 

 An Out-of-Cycle Review is a tool that USTR uses to encourage progress on IP issues of concern. Out-of-Cycle Reviews provide an opportunity to address and remedy such issues through
heightened engagement and cooperation with trading partners and other stakeholders. Out-of Cycle Reviews focus on identified IP challenges in specific trading partner markets. Successful
resolution of specific IP issues of concern can lead to a positive change in a trading partner’s Special 301 status outside of the typical period for the annual review. Conversely, failure to
address identified IP concerns, or further deterioration as to an IP-related concern within the specified Out-of-Cycle Review period, can lead to an adverse change in status. In December 2017, the United States concluded an Out-of-Cycle Review of Thailand and moved Thailand from the Priority Watch List to the Watch List.

In June 2017, the OECD and EU Intellectual Property Office (EUIPO) published the joint study “Mapping the Real Routes of Trade in Fake Goods.” This study traced the complex trade routes
employed by counterfeiters across ten product categories and noted the prevalence of international counterfeit sales through small shipments and parcels. This research determined that “China is the top producer of counterfeit goods in nine out of ten analyzed product categories, while Hong Kong (China), UAE, and Singapore are global hubs for trade in counterfeit goods.” In those categories alone, the trade in fakes amounted to $284 billion in 2013. In certain sectors, other countries were found to be major counterfeit producers, including India for counterfeit medicines exported to Africa, the EU, the United States, Canada, South America, and the Caribbean; Turkey for counterfeit leather goods, foodstuffs, and cosmetics; and Indonesia for counterfeit foodstuffs
India’s copyright royalty board is not fully functional, although recent steps and highlevel statements have made progress toward this goal.

USTR notes the following important developments in 2017 and early 2018:

India amended patent examination guidelines to eliminate a novel hardware requirement that may have hindered computer-related invention innovations, made progress toward significantly reducing patent and trademark pendency, became a participant in the WIPO Centralized Access to Search and Examination (CASE) system to facilitate patent worksharing, produced an IP enforcement toolkit for police, and established a state-level enforcement unit to help address online piracy and counterfeit challenges.

In 2017, India continued to carry out high-level initiatives involving IP, including the 2016 National IP Policy and Startup India. While these and other Modi Administration initiatives have acknowledged the important role innovation and creativity play in India’s development, they have failed to draw a direct link to specific IP reforms that would best help achieve these goals. Over the past year, despite administrative actions aimed at improving India’s IP system  India has yet to address key longstanding deficiencies in its IP regime. India remains one of the world’s most challenging major economies with respect to protection and enforcement of IP.

In particular, India has yet to take steps to address longstanding patent issues that affect innovative industries. Companies across different sectors remain concerned about narrow patentability
standards, the potential threat of compulsory licensing and patent revocations, as well as overly broad criteria for issuing such licenses and revocations under the India Patents Act. Further, patent applicants face costly and time-consuming patent opposition hurdles, long timelines for receiving patents, and excessive reporting requirements. The U.S. Government and right holders welcomed the steps that India took in 2017 to better integrate its patent office into the World Intellectual Property Organization (WIPO) Centralized Access to Search and Examination (CASE) system and hope that India will take further steps to streamline and clarify reporting requirements.

A 2017 publication produced by the OECD and EU Intellectual Property Office, “Mapping the Real Routes of Trade in Fake Goods,” revealed India to be a key producer and exporter of counterfeit foodstuff, pharmaceuticals, perfumes and cosmetics, textiles, footwear, electronics and electrical equipment, toys, games, and sporting equipment. With respect to counterfeit pharmaceuticals, the report found that India was the origin for 55 percent of the total value of global counterfeit pharmaceutical seizures—by far the largest and noted that these counterfeit pharmaceuticals are shipped “around the globe, with a special focus on African economies, Europe, and the United States.

In specific sectors, certain stakeholder reports are especially troubling. For example, counterfeit pesticides may account for 30 percent of sales by volume, the rate of unlicensed software use stands at around 58 percent Furthermore, illegal practices that contribute to high piracy rates include the underreporting of cable subscriptions, widespread use of ISDs, and circumvention of TPMs. Finally, the expansive granting of licenses under Chapter VI of the Indian Copyright Act and overly-broad exceptions for certain uses have raised concerns about the strength of copyright protection and complicated the functioning in the market for music licensing.

The United States intends to continue to engage with India on these and other IP matters through the primary channel of the Trade Policy Forum.

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Tuesday,May 1, 2018

Tags – USTR Report 2018 Special 301 Report India