US Trade Representative releases report on intellectual property rights

The Office of the United States Trade Representative April 27 released the 2018 Special 301 Report, identifying trading partners that do not adequately or effectively protect and enforce intellectual property 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.

“The ideas and creativity of American entrepreneurs fuel economic growth and employ millions of hardworking Americans,” said U.S. Trade Representative Robert Lighthizer. “This report sends a clear signal to our trading partners that the protection of Americans’ intellectual property rights is a top priority of the Trump administration.”

According to U.S. Government estimates, IP-intensive industries directly and indirectly support 45.5 million American jobs, about 30 percent of all employment in the United States. 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.

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.

India also remains on the Priority Watch List this year for longstanding challenges in its IP framework and lack of sufficient measurable improvements, particularly with respect to patents, copyrights, trade secrets and enforcement, as well as for new issues that have negatively affected U.S. right holders over the past year.

USTR downgrades Canada from the Watch List to the Priority Watch List this year for failing to make progress on overcoming important IP enforcement challenges. Key concerns include poor border enforcement generally and, in particular, lack of customs authority to inspect or detain suspected counterfeit or pirated goods shipped through Canada, concerns about IP protections and procedures related to pharmaceuticals, deficient copyright protection and inadequate transparency and due process regarding the protection of geographical indications.

USTR downgrades Colombia from the Watch List to the Priority Watch List for its longstanding failure to make meaningful progress in fulfilling obligations under the United States-Colombia Trade Promotion Agreement, such as obligations to amend its copyright law. USTR is also announcing an Out-of-Cycle Review of Colombia to assess its progress in addressing these and other concerns.

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.

USTR places Saudi Arabia and the United Arab Emirates on the Watch List. For Saudi Arabia, there are concerns regarding recent deteriorations in IP protection for pharmaceutical products, in addition to outstanding concerns regarding IP enforcement and the continued use of unlicensed software by the government. For the UAE, the placement on the Watch List is in response to longstanding concerns about the sale and transshipment of counterfeit goods and the establishment of collecting management organizations, as well as recent policy changes that may not provide adequate and effective IP protection for pharmaceutical products.

USTR closes the Out-of-Cycle Reviews for Kuwait without a change in status and Tajikistan with a downgrade to the Watch List. Kuwait has not yet brought its copyright regime in line with its international commitments and still needs to make necessary improvements to the regulations implementing its 2016 Copyright and Related Rights Law. Tajikistan failed to address unlicensed software use by government agencies during the OCR. USTR announced that it will initiate OCRs for Colombia, Kuwait, and Malaysia to promote engagement and progress on specific IP opportunities and challenges.

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. The Special 301 Report is an annual review of the global state of IP protection and enforcement. USTR conducts the Special 301 review annually pursuant to Section 182 of the Trade Act of 1974, as amended.

Public engagement

USTR continued to encourage broad and transparent public engagement in this year’s Special 301 review process. USTR invited written submissions from the public through a request published in the Federal Register on Dec. 27, 2017. On March 8, 2018, 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 and non-governmental organizations. USTR offered a post-hearing comment period during which hearing participants could submit additional information in support of, or in response to, hearing testimony and posted on its public website the full transcript and video of the Special 301 hearing.

The December 2017 notice in the Federal Register—and post-hearing comment period—drew submissions from 39 non-government stakeholders and 23 trading partner governments. The submissions that USTR received are available to the public online at www.regulations.gov, docket number USTR-2017-0024.