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China, India on USTR Special 301 Priority Watch List

10 June 2013

China, India on USTR Special 301 Priority Watch List
China and India have both been named by the United States Trade Representative (USTR) to the 2013 Special 301 Priority Watch List, along with fellow Asian nations Indonesia, Pakistan, Russia and Thailand.

Kuwait, the Philippines, Tajikistan, Turkmenistan, Uzbekistan and Vietnam were all named to the Watch List for 2013.

China’s position on the priority watch list is due, in part, to the Special 301 committee’s belief that obtaining effective enforcement of IPR in China “remains a central challenge, as it has been for many years.” This situation has been made worse by cybertheft, as information suggests that 32 actors located in China have been engaged in sophisticated, targeted efforts to steal IP from US corporate systems, the report says.

“Real world conditions for rights holders have overall seen little significant improvement. As in past years, a wide range of US stakeholders in China report serious obstacles to effective protection of IPR in all forms, including patents, copyrights, trademarks, and protection of pharmaceutical test data. As a result, sales of IPR intensive goods and services in China remain disproportionately low when compared to sales in similar markets that provide a stronger environment for IPR protection and market access,” the report says.

The USTR also cited the continued theft of trade secrets in China, calling it an escalating concern. “Not only are repeated thefts occurring inside China, but also outside of China for the benefit of Chinese entities. Conditions are likely to deteriorate as long as those committing the thefts and those benefitting continue to operate with relative impunity, frequently entering into unfair competitive relationships with their victims. Too often, Chinese authorities view trade secrets cases as routine commercial disputes, rather than as serious violations of law,” the report says.

The report says particularly troubling are “public reports by independent security firms that actors affiliated with the Chinese military and Chinese Government have systematically infiltrated the computer systems of a significant number of US companies and stolen hundreds of terabytes of data, including IP, from these companies.”

India has made “limited progress” in improving its weak IPR legal framework and enforcement system in 2012, the report says, including enacting copyright amendments and publishing for comment draft rules to implement the Madrid Protocol and a draft National Intellectual Property Strategy, which proposes to create an enhanced IPR management system.

“In many areas, however, IPR protection and enforcement challenges are growing, and there are serious questions regarding the future condition of the innovation climate in India across multiple sectors and disciplines,” the report says.

Recent actions by the Indian Government have raised questions with the Special 301 committee about the innovation climate in India and risk hindering the country’s progress towards an innovation focussed economy.

“In the pharmaceutical sector, some innovators are facing serious challenges in securing and enforcing patents in India,” the report says.

Brunei has been removed from the Watch List in 2013. The country has, the USTR says, significantly increased its focus on IPR protection and enforcement in recent years through substantial and meaningful enforcement efforts, including both civil and – for the first time – criminal actions. Brunei recently created its first patent office and enacted patent law amendments that significantly strengthen its patent regime. Brunei has also announced recently that it is taking steps to join the WIPO Internet Treaties.

The USTR designated Ukraine a Priority Foreign Country, a designation reserved for countries with the most egregious intellectual property rights related acts, policies and practices with the greatest adverse impact on relevant US products, and that are not entering into good faith negotiations or making significant progress in negotiations to provide adequate and effective IPR protection. It is the first time in seven years that a country has been listed as a Priority Foreign Country.

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