BY INTELLECTUAL PROPERTY WATCH| April 27, 2016,
The Office of the United States Trade Representative (USTR) does not hesitate to add even its closest friends to its annual list of concerns about possible inadequate protection of US intellectual property rights. So this year, along with perennial listees China, India and dozens of others, vigorous IP-rights defender Switzerland makes an appearance. The annual Special 301 report was issued today, and in its press release this year, USTR also included its primary client in publishing the list – the rightsholder industry.
“USTR adds Switzerland to the Watch List this year,” the release says. “While Switzerland is generally a strong partner on IP issues, copyright holders have essentially been prevented from enforcing their rights against online infringers and Switzerland has become an increasingly popular host country for infringing websites.”
Other close partners on the list or facing further scrutiny include Canada, Chile, Colombia and Spain. And as an example of the breadth of the report, problems US rightsholders claim to have defending country-code internet domain names led USTR, in the report, to cite China, Denmark, Germany, the Netherlands, Spain, Sweden, and Switzerland.
The report also includes an extensive section on geographical indications, taking issue with the European Union system.
This year’s report also reflects the increasing inclusion of trade secrets in the context of intellectual property rights, despite significant differences in purpose. It singles out China and India for problems on trade secret protection.
[Update: some countries improved their position on the USTR list. For instance, Ecuador was moved from the Priority Watch List to the Watch List for its willingness to work with the US, despite some ongoing concerns such as counterfeiting and piracy. USTR also said it would seek clarification of Ecuador’s process for using compulsory licensing.]
The Special 301 report typically amounts to an IPR agenda for USTR engagement with trading partners for the coming year, though in rare cases it could extend to trade sanctions.
The full press release with a link to the report is reprinted below.
USTR Releases Special 301 Report on Protection of American Intellectual Property Rights Across the World
Obama Administration unveils list of the world’s most significant challenges facing American intellectual property rights alongside bipartisan members of Congress and business community leaders
Washington, D.C. – On the heels of World Intellectual Property Day, the Office of the United States Trade Representative (USTR) has released the 2016 “Special 301” Report on the global state of intellectual property rights protection and enforcement. U.S. Trade Representative Michael Froman was joined by Members of Congress and the American business community in order to unveil the report, which is the last that will be released during the Obama Administration.
“Intellectual property is a critical source of economic growth and high-quality jobs for the United States, and it is more important than ever to prevent foreign governments and competitors from ripping off United States innovators who are trying to support high-paying jobs by exporting their goods and services to consumers around the world,” said U.S. Trade Representative Michael Froman. “This final Special 301 Report of the Obama Administration underlines the great value that unique American creativity and innovation have for millions of families – ranging from small businesses owners to medical researchers to employees of the recording and motion picture industries – as well as the efforts of the executive branch, our bipartisan partners in Congress, and the United States business community to vigilantly monitor abuses of American intellectual property rights anywhere they exist in the world.”
“Each year, the U.S. film and television industry supports 1.9 million American jobs, $121 billion in total wages, and nearly 89,000 small business – generating $16.3 billion in exports that fuel our nation’s global competitiveness,” said Motion Picture Association of America Chairman and CEO Senator Chris Dodd. “However, as highlighted in the Special 301 Report, our industry continues to face many challenges in foreign markets that lack adequate and effective protections for intellectual property rights. We are grateful for the USTR’s ongoing commitment to stand with the individuals and small businesses whose hard work and creativity drive our industry.”
“We thank Ambassador Froman and his staff for their work in shining a light on the serious problems posed by inadequate intellectual property laws and the impact these laws have upon the creative community,” said Cary Sherman, Chairman and CEO of the Recording Industry Association of America (RIAA). “The Special 301 report serves as an actionable moment for named countries to step up and address these problems. The major music labels in the U.S. strongly rely on the protection of intellectual property both at home and abroad to make music that is heard and loved the world over. Without strong IP laws, our member labels could not do what they do best: discover talented musicians and performers, nurture their sound, and distribute, market, and promote their music across the world. Moreover, creative communities throughout the globe deserve an environment where intellectual property is valued and protected. We hope that governments of the countries listed in this report take a good look at what is happening on their watch and take meaningful steps to prevent theft from occurring.”
“Intellectual property protections enhance job growth both domestically and internationally,” said Stanley Pierre-Louis, general counsel of the Entertainment Software Association (ETA), which represents the U.S. video game industry. “Content creators and consumers lose when countries fail to protect intellectual property. We are grateful for the USTR’s leadership in protecting gamers’ access to original works and protecting the incentives for game developers to innovate.”
According to estimates, approximately 70 percent of the value of our publicly traded companies is attributable to their “intangible assets”— or IPR. In 2010, the value added of U.S.-held IPR was approximately $5 trillion, contributing 34 percent to our Gross Domestic Product. Protection and enforcement of IPR around the globe directly and indirectly support an estimated 40 million U.S. jobs in IP-intensive industries. Those jobs pay on average 42 percent higher wages than other jobs.
Significant elements of the 2016 Special 301 Report include the following:
- USTR continues to place China on the Priority Watch List. China has undertaken wide-ranging intellectual property law reform efforts and some positive enforcement initiatives, but both longstanding and new IPR concerns merit increased attention including with respect to trade secret theft, rampant online piracy and counterfeiting, continued high levels of physical pirated and counterfeit goods, and localization requirements that condition market access on use of IPR developed in or transferred to China.
- India also remains on the Priority Watch List this year for lack of sufficient measurable improvements to its IPR framework despite more robust engagement and positive steps forward on IPR protection and enforcement undertaken by the Government of India. USTR retains the option of conducting an OCR of India should developments—either positive or negative—weigh in favor of a review in advance of the annual cycle.
- USTR adds Switzerland to the Watch List this year. While Switzerland is generally a strong partner on IP issues, copyright holders have essentially been prevented from enforcing their rights against online infringers and Switzerland has become an increasingly popular host country for infringing websites.
- USTR also announces that it will conduct OCRs for Colombia, Pakistan, Tajikistan, and Spain to promote engagement and progress on specific IPR opportunities and challenges identified in this year’s review.
- The Report and the lists it contains are dynamic, reflecting the progress made by our trading partners to resolve and address IPR issues of concern to the United States and the United States’ continued resolve to focus on priority issues. Areas of progress include:
- Pakistan has taken significant steps to improve IPR protection and enforcement including establishing specialized IPR courts, establishing a timeline to draft and implement amendments to IPR laws, improving border enforcement procedures, undertaking public awareness programs on IPR protection, and committing to regular action-oriented engagement with the U.S. government and stakeholders. As a result Pakistan is upgraded from the Priority Watch List to the Watch List with an OCR to monitor ongoing progress.
- Ecuador reinstated criminal procedures and penalties for commercial scale counterfeiting and piracy which was the basis for downgrading Ecuador to the Priority Watch List in 2015.
- Tajikistan, Belarus and Trinidad & Tobago are removed from the Watch List this year for improvements to enforcement of IPR including in the areas of customs enforcement, criminal prosecutions, and broadcast piracy, respectively.
In addition, this year’s Report highlights the robust and balanced standard for IPR protection and enforcement in the Trans-Pacific Partnership (TPP) Agreement. “From movies and music to green technology and pharmaceuticals, U.S. creators and innovators have a significant competitive advantage in the area of intellectual property. We can’t afford to let countries on the Priority Watch List or Watch List write the rules for intellectual property – rules that are often discriminatory or that discourage creativity and innovation,” explained U.S. Trade Representative Michael Froman. “That’s why we fought so hard for the rules established in the TPP. Our rules level the playing field, enhance transparency and due process, and promote creativity and innovation.”
The “Special 301” Report is an annual review of the global state of IPR protection and enforcement. USTR conducts this review 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.
USTR reviewed seventy-three (73) trading partners for this year’s Special 301 Report, and placed thirty-four (34) of them on the Priority Watch List or Watch List.
In this year’s Report, trading partners on the Priority Watch List present the most significant concerns this year regarding insufficient IPR protection or enforcement or actions that otherwise limited market access for persons relying on intellectual property protection. Eleven (11) countries — Algeria, Argentina, Chile, China, India, Indonesia, Kuwait, Russia, Thailand, Ukraine, and Venezuela — are on the Priority Watch List. These countries will be the subject of particularly intense bilateral engagement during the coming year.
Twenty-three (23) trading partners are on the Watch List, and also merit bilateral attention to address underlying IPR problems: Barbados, Bolivia, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, Greece, Guatemala, Jamaica, Lebanon, Mexico, Pakistan, Peru, Romania, Switzerland, Turkey, Turkmenistan, Uzbekistan, and Vietnam.
USTR also announces that it will launch several OCRs to enhance engagement with trading partners and encourage progress on IPR issues of concern. USTR will conduct an OCR of Watch List countries Colombia and Pakistan, as well as of two countries not currently listed, Spain and Tajikistan. Details appear in Section II of the Report. USTR may conduct additional OCRs of other trading partners as circumstances warrant or as requested by the trading partner.
USTR continued its enhanced approach to public engagement activities in this year’s Special 301 process. USTR requested written submissions from the public through a notice published in the Federal Register on January 11, 2016. On March 2, 2016, USTR hosted a public hearing that provided the opportunity for interested persons to testify before the interagency Special 301 Subcommittee of the Trade Policy Staff Committee about issues relevant to the review. The hearing featured testimony from witnesses representing foreign governments, industry, academics, and non-governmental organizations. Continuing a practice initiated during the prior year, USTR recorded and posted on its public website the testimony received at the Special 301 hearing, and offered a post-hearing comment period during which hearing participants and interested parties could submit additional information in support of, or in response to, hearing testimony.
The January 2016 notice in the Federal Register — and post-hearing comment period — drew submissions from 62 interested parties, including 16 trading partner governments. The submissions that USTR received are available to the public online at www.regulations.gov, docket number USTR-2015-0022. The public can access both the video and transcript of the hearing at www.ustr.gov.
Read USTR Special 301 Report full text here https://ustr.gov/sites/default/files/USTR-2016-Special-301-Report.pdf