U.S. Trade Representative Releases Special 301 Report on Global IPR

    By Kevin E. Noonan --

At the end of last month, the U.S. Trade Representative, Ron Kirk, issued the 2010 Special 301 Report, which according to the USTR website "reflects the Administration's resolve to encourage and maintain effective [Intellectual Property Rights (IPR)] protection and enforcement worldwide" by identifying "a wide range of serious concerns, ranging from troubling 'indigenous innovation' policies that may unfairly disadvantage U.S. rightsholders in China, to the continuing challenges of Internet piracy in countries such as Canada and Spain, to the ongoing systemic IPR enforcement challenges in many countries around the world."

The Report is promulgated pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act (enacted in 1994).  The Trade Representative is required under the Act to "identify those countries that deny adequate and effective protection for IPR or deny fair and equitable market access for persons that rely on intellectual property protection."  The Trade Representative has implemented these provisions by creating a "Priority Watch List" and "Watch List."  Placing a country on the Priority Watch List or Watch List is used to indicate that the country exhibits "particular problems . . . with respect to IPR protection, enforcement, or market access for persons relying on intellectual property."  These watch lists are reserved for countries having "the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on the relevant U.S. products."

This report, on the state of intellectual property rights worldwide, identifies eleven countries on a "Priority Watch List" and another 29 on a "Watch List," all relating to deficiencies in intellectual property protection in these countries.  The Priority Watch List of the report lists China, Russia, Algeria, Argentina, Canada, Chile, India, Indonesia, Israel, Pakistan, Thailand, and Venezuela; the only country not on this list that was on the list last year is Israel.  (Israel's status is "pending" in the Report, which states that "Israel has entered into an understanding with the United States whereby it will address key outstanding IPR issues").  Countries on this list "do not provide an adequate level of IPR protection or enforcement, or market access to persons relying on intellectual property protection."  The Report "identifies a wide range of serious concerns, ranging from troubling 'indigenous innovation' policies that may unfairly disadvantage U.S. rights holders in China, to the continuing challenges of Internet piracy in countries such as Canada and Spain, to the ongoing systemic IPR enforcement challenges in many countries around the world.

This year, the Watch List names Belarus, Bolivia, Brazil, Brunei, Columbia, Costa Rica, Dominican Republic, Ecuador, Egypt, Finland, Greece, Guatemala, Italy, Jamaica, Kuwait, Lebanon, Malaysia, Mexico, Norway, Peru, Philippines, Poland, Romania, Spain, Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan, and Vietnam.  Countries not on the Watch List this year that were listed last year include Czech Republic, Hungary, Saudi Arabia, and Taiwan.

The Report notes that public response to a Federal Register Notice used to prepare the Report showed a "significant increase" over the number of responses filed in 2009, and provides access to these comments (www.regulations.gov, docket number USTR-2010-0003) as well as the testimony of 23 witnesses at a public hearing.  The Report notes some "positive accomplishments," including "improved efforts by trading partners the Czech Republic, Hungary, and Poland," all of which are not on this year's Watch List.

The Report discusses initiatives to strengthen IPR internationally, including the World Trade Organization, bilateral and regional initiatives, the Anti-Counterfeiting Trade Agreement, trade preference program reviews and "expanded international communication" efforts.  It also outlines international trends in counterfeiting and piracy "involving the mass production and sale of a vast array of fake goods, including items such as counterfeit medicines, health care products, food and beverages, automobile and airplane parts, toothpaste, shampoos, razors, electronics, batteries, chemicals, and sporting goods."  It notes that there are a "greater diversity in the types of goods that are being counterfeited, as well as the production of labels and components for these fake products," and a "rapid growth in the piracy of copyrighted products in virtually all formats, as well as counterfeiting of trademarked goods."  The Report also discusses Internet and digital piracy, facilitated by "increased availability of broadband Internet connections around the world."  These concerns are specifically noted in Brazil, Canada, China, India, Italy, Russia, Spain and Ukraine, including unauthorized retransmission of sporting events particularly in China and the Netherlands.  The Report also sets forth as a "growing area of concern" trademark infringement of country code top level domain name extensions.

As it did last year, the Report contains a section on "Intellectual Property and Health Policy," specifically relating to the 2001 Doha Declaration on the TRIPS Agreement.  The Report states that the U.S. "respects a country's right to protect public health, in particular, to promote access to medicines for all."  Accordingly, the Report states that the U.S. "respects our trading partners' rights to grant compulsory licenses" consistent with the provisions of the Doha Declaration, including provisions of the August 2003 agreement whereby countries are permitted to grant such compulsory licenses not only for producing pharmaceuticals for internal use but also for export to countries unable to produce drugs themselves.  Accordingly, the Report states that the U.S. "will work to ensure that the provisions of our bilateral and regional trade agreements are consistent with these views and do not impede the taking of measures necessary to protect public health."  On the other hand, the Report contains a section outlining the USTR's efforts to "reduce market access barriers faced by U.S. pharmaceutical and medical device companies in many countries," specifically calling out Japan, Poland, Algeria and Indonesia as countries of particular concern in this regard.

The Report contains in a final section a review of U.S. activities in the WTO to resolve disputes with countries such as China and the EU over trade issues.

Section II of Report is a detailed, country-by-country discussion for each country on the Priority Watch List and the Watch List, relating to the activities (or lack thereof) of each country that results in placement of that country on these lists.  Section III of the Report identifies "notorious markets" for places in the world where "[g]lobal piracy and counterfeiting continue to thrive."  These include several websites (TV Ants, B2B and B2C websites in China, Webhards in Korea, Allofmp3.com clones in Russia) and physical markets (Baidu, Lowu Market, Silk Market  and Yiwu in China; Bahia in Ecuador, Greenhills, Quiapo, Binondo, Makati Cinema Square, and 168 Mall in the Philippines; Gorbushka and Rubin Trade Center and Savelovskiy Market in Russia; Harco Glodok in Indonesia; Petrivka Market in Ukraine; Panthip Plaza, the Klong Thom, Saphan Lek and Baan Mor shopping areas, the Patpong and Silom shopping areas, the Mah Boon Krong (MBK) Center, the Sukhumvit Road area, Nehru Place, Palika Bazaar, Richie Street, Burma Bazaar Manish Market, Heera Panna, Lamington Road, the Mumbai Fort District, and Chandni Chowk in India; Tepito, Plaza Meave, Eje Central, Lomas Verdes, Pericoapa Bazaar, San Juan de Dios, Simitrio-La Cuchilla, and Pulgas in Mexico; La Salada in Argentina; and the Tri-Border Region between Paraguay, Argentina and Brazil).

The U.S. Trade Representative Report provides insights into both the concerns of U.S. IP rights holders and the Administration's intentions to work with, cajole, coerce, or threaten other countries to increase protection for IP rights of U.S. IP rights holders.  Western governments have been frustrated, particularly with regard to pharmaceutical products, in implementation of international trade treaties designed to increase IP rights protection.  As in earlier years, the Report is in some ways the answer to the question, "What are we going to do about it?"  So far, the honest answer seems to be "not enough."

For additional information regarding this and other related topics, please see:

• "New Administration, Same Result: U.S. Trade Representative's Section 301 Report," May 6, 2009
• "Congressmen Criticize U.S. Trade Representative over Special 301 Report," July 1, 2008
• "U.S. Continues Efforts to Protect Patent Rights Abroad," April 29, 2008

Comments

[6]

Kevin, why should our government continue efforts to protect patent rights abroad?

[Kevin E. Noonan]

Dear 6:

The idea is to protect IP rights of US companies abroad. Think pirated copies of Windows 7 or Avatar, or generic drugs. Promoting respect for IP rights was a big part of the reason for the WTO.