Battles Rage on Many Fronts to Curtail Counterfeiting and Piracy

Annual review by USTR shows both progress and backsliding. Concern over Canada grows.

The theft of intellectual property remains a significant problem globally. That's the upshot of the "Special 301" report recently issued by the Office of the U.S. Trade Representative (USTR), which annually reviews the adequacy and effectiveness of intellectual property rights (IPR) protection by U.S. trading partners. Seventy-seven trading partners were reviewed in the 2009 report.

Among the significant developments in the 2009 Special 301 report is the inclusion of Canada, the United States' largest trading partner, to the Priority Watch list for the first time. The Priority Watch list is the most serious of three IPR monitoring lists. Countries on the priority list don't provide adequate levels of IPR protection or enforcement, or market access for persons relying on intellectual property protection, the USTR claims. "In this time of economic uncertainty, we need to redouble our efforts to work with all of our trading partners -- even our closest allies and neighbors such as Canada -- to enhance protection and enforcement of the intellectual property rights in the context of a rules-based trading system," stated USTR Ambassador Ron Kirk.

No country that appeared on the 2008 Priority Watch list fell off the 2009 version. However, Algeria and Indonesia were elevated to the Priority Watch list in this year's report, bringing to 12 the number of countries on that list. Another 33 countries appear on the lower-level watch list, while a single country -- Paraguay -- is on a special monitoring list. Highlights from the report include:

Canada -- The USTR report states that the Canadian government has not delivered on commitments to "promptly and effectively" implement key copyright reforms, and also needs to strengthen border measures to protect IPR. "The United States hopes that Canada will implement legislative changes to provide a stronger border enforcement system by giving its customs officers the authority to seize products suspected of being pirated or counterfeit without the need for a court order," the report notes.

China -- Despite increased attention to intellectual property rights, enforcement remains "largely ineffective and non-deterrent." To illustrate, the report points out that 81% of IPR-infringing products seized at the U.S. borders in 2008 were of Chinese origin, and that share rose in terms of value by some 40% over 2007. Additionally, the report notes, "The United States also remains concerned by reports that officials, apparently motivated by the financial crisis and the need to maintain jobs, are urging more lenient enforcement of IPR laws."

On the plus side, the USTR noted that China launched an "unprece-dented" crackdown on unauthorized retransmissions of sporting events during the Beijing Olympics, reportedly resulting in 453 infringement cases. "This experience shows that when the Chinese government chooses to exercise its political will to deal with an IPR problem, it can yield results," the Special 301 report said. China remains on the Priority Watch list.

Indonesia -- Indonesia will be added to the Priority Watch list in 2009. According to the report, "there has been little progress on IPR protection and enforcement since 2006, when Indonesia's status in the Special 301 report improved following promising steps taken by the government." Unfortunately, those gains have not continued "and the government appears to be moving backward from some previous advances." That said, a longstanding trademark dispute was resolved in 2008.

Russia -- Noting that Russia has been slow to implement some commitments it made in a November 2006 bilateral agreement on intellectual property rights protection, the country remains on the Priority Watch list in 2009. In that agreement, "Russia committed to fight optical disc and Internet piracy, protect against unfair commercial use of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products, deter piracy and counterfeiting through criminal penalties, strengthen border enforcement, and bring its laws into compliance with [World Trade Organization] and international IPR norms." More positively, the report notes that Russia has made progress combating software piracy and acceded to the World Intellectual Property Organization Internet Treaties.

Positive Developments

The Special 301 report outlined a host of other positive developments regarding IPR enforcement, including:

  • For the first time in the history of the report (which dates to 1989), Korea is on neither the Priority Watch nor Watch lists. That's due to significant improvements made during the past year, as well as the Korean government's placing a priority on its IPR regime, according to the USTR.
  • Chile created a specialized brigade within the Chilean police force to handle IPR crimes.
  • India passed an act in 2008 that will increase penalties for adulterated pharmaceuticals. It also introduced an electronic filing system for trademark and patent applications.

The complete Special 301 report is located online at the USTR Web site, www.ustr.gov.

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