[A2k] IP Watch on US Special 301 Report

[Judit Rius Sanjuan]

http://www.ip-watch.org/weblog/index.php?p=3D602&res=3D1280_ff&print=3D0

USTR Toughens IP Stance On China, Russia, Thailand; Praises EU, Brazil
4/30/2007

By William New
The United States Trade Representative=92s office on 30 April announced
the elevation of its pressure on China, Russia, Thailand, and others to
better protect US intellectual property rights. But the announcement
stirred reactions by accentuating the increasingly political-sounding
criticism by developed countries of Thailand=92s decision to utilise
flexibilities under international trade rules allowing countries to
manufacture cheap versions of patented drugs.

Brazil, meanwhile, was taken off the =93watch list=94 of USTR=92s annual
so-called Special 301 process for improvements in copyright enforcement.
It will be monitored under a so-called =93out-of-cycle=94 review, along wit=
h
the Czech Republic and Pakistan, and reassessed in a year. A USTR
official told reporters that Brazil=92s recent declaration that the
antiretroviral drug Efavirenz is of public interest, which could lead to
a compulsory license, had not worked against Brazil but would be
considered in the upcoming review.

This year=92s report is also marked by the results of the first
province-by-province analysis of China, seen as the largest source of
pirated and counterfeit goods globally. Russia risks losing US support
for a multilateral agreement on the country=92s accession to the World
Trade Organization, a US trade official said in a telephone press
briefing. And a contributing reason for Thailand=92s elevation on the list
is its decision to issue compulsory licenses for three pharmaceuticals
(two HIV/AIDS drugs and a heart disease treatment), allowing the use of
the patented material to produce cheaper versions, an official said.

=93The [Bush] administration=92s top priorities this year continue to be
addressing weak IPR protection and enforcement, particularly in China
and Russia,=94 the report said. =93Although this year=92s Special 301 repor=
t
<http://www.ustr.gov/Document_Library/Press_Releases/2007/April/SPECIAL_301=
_Report.html>
shows positive progress in many countries, rampant counterfeiting and
piracy problems have continued to plague China and Russia, indicating a
need for stronger IPR regimes.=94

The report contains separate sections on =93counterfeit pharmaceuticals=94,
=93intellectual property and health,=94 and =93supporting pharmaceutical
innovation,=94 which tout the advantages of strong IP protection. For
Thailand, one of the reasons cited for its elevation is =93the further
indications of a weakening of respect for patents=94 by issuing the
compulsory licenses, even though it was not accused of violating WTO rules.

=93While the United States acknowledges a country=92s ability to issue such
licenses in accordance with WTO rules, the lack of transparency and due
process exhibited in Thailand represents a serious concern,=94 the report
said. =93These actions have compounded previously expressed concerns such
as delay in the granting of patents and weak protection against unfair
commercial use for data generated to obtain marketing approval.=94

=91Bullies and Hypocrites=92

In response to questions from reporters, USTR stressed that the
compulsory licenses were only one factor among many longstanding
concerns in Thailand, such as copyright protection. But Knowledge
Ecology International (KEI), an advocacy group, reacted strongly. =93The
sanctioning of countries for using legitimate and important
flexibilities in the TRIPS agreement brings shame to all US citizens who
are increasingly seen in Thailand and elsewhere as bullies and
hypocrites,=94 KEI Executive Director James Love said in a statement. KEI
said Thailand has been =93highly=94 transparent in its issuance of the
licenses, which the government has said repeatedly since taking the
decisions in December and January.

=93Since Thailand is acting legally, the USTR makes vague allegations that
while Thailand has the =91ability=92 under the WTO rules to issue such
licenses, there was something undefined that the USTR cannot or will not
explain that was worth citing on the 301 list,=94 Love stated. =93If
Thailand actually did something the US claims is contrary to US trade
policy, the USTR should at least be able to explain it. What is the =93due
process=94 for the 301 list? We should not be giving the impression to the
world that US pharmaceutical industry lobbyists can use USTR to settle
commercial disputes, entirely outside of the framework of global trade
rules.=94

In addition to analysing individual provinces in China, the report
singles out =93notorious markets=94 around the world, such as China=92s Sil=
k
Street Market or Russia=92s allofmp3.com, the world=92s largest server-base=
d
pirate music website. US copyright industry sources indicate that
perhaps 90 percent of all copyrighted materials sold in China were
pirated in 2006, the report said.

A copyright industry group praised the report, while also pointing out
shortcomings. Dan Glickman, Chairman and CEO of the Motion Picture
Association of America said the report =93provides important leadership
for dealing with the global scourge of piracy.=94 But Glickman criticised
the decision to return Canada to the lower watch list despite US
industry pressure to elevate it for failing to stop filming of new
release movies that then end up on the Internet. =93Canada should have
been elevated to the Priority Watch List,=94 Glickman said.

China Standards-Setting in Sights

The report also cites concern over China=92s treatment of intellectual
property in standards-setting. It also specified concern with China=92s
=93lack of clarity in laws involving generic drug patent infringement=94 an=
d
China=92s =93protection against unfair commercial use for data generated to
obtain marketing approval.=94 A similar concern was cited in a number of
countries, such as India, where Swiss pharmaceutical company Novartis
has legally challenged India=92s new patent law.

As mandated by the 1974 US Trade Act and amended by later agreements,
every year at the end of April, USTR issues the report listing countries
it deems to =93deny adequate and effective protection for IPR or deny fair
and equitable market access for persons that rely on intellectual
property protection.=94 Those deemed most problematic are designated as
=93priority foreign countries,=94 followed by the =93priority watch list=94=
 and
the =93watch list.=94 Countries that fail to respond are threatened with
losing the trade benefits the US government unilaterally provides for
access to its market known the Generalised System of Preferences, and
ultimately, trade sanctions.

In addition to China and Russia, on the priority watch list this year
are Argentina, Chile, Egypt, India, Israel, Lebanon, Thailand, Turkey,
Ukraine and Venezuela. There are 30 countries on the watch list (see below)=
.

Perhaps reacting to a negative portrayal by some of the annual report,
which gives USTR a unilateral wedge against smaller economies, the trade
office this year emphasised the positive side of the report as well.

Positive Changes Too

The report =93isn=92t only about complaints and problems,=94 a US trade
official said. Removed from the watch list altogether were Bahamas,
Bulgaria, Croatia, the European Union and Latvia. The EU change was
mainly due to its adoption of new regulations on geographical
indications (products deriving their names from geographical locations
or characteristics) after an adverse 2005 WTO dispute settlement panel
ruling, USTR said.

The report also highlighted USTR=92s focus on Internet piracy. It said,
for instance, that the United States will continue to use bilateral
trade negotiations to elevate countries=92 protection levels, and will
continue to press other countries to implement two 1996 copyright
treaties at the World Intellectual Property Organization, the WIPO
Copyright Treaty and the WIPO Performances and Phonograms Treaty

The United States also will continue to provide technical assistance to
trading partners, will work with WTO members to implement the Agreement
on Trade-Related Aspects of Intellectual Property Rights (TRIPS),
possibly using dispute settlement consultations where necessary to
encourage implementation. It also will continue to push for discussion
of implementation of TRIPS enforcement provisions in the WTO TRIPS
Council, along with the European Union, Japan and Switzerland, it said.

The watch list this year includes: Belarus, Belize, Bolivia, Brazil,
Canada, Ecuador, Hungary, Indonesia, Italy, Jamaica, Kuwait, Lithuania,
Malaysia, Mexico, Pakistan, Philippines, Poland, Romania, Saudi Arabia,
Taiwan, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam.

There is also a watch list of countries that recently completed free
trade agreements with the United States, including Colombia, Costa Rica,
Dominican Republic, Guatemala, Peru and Korea, all of whom were on the
watch list last year.

William New may be reached at wnew@ip-watch.ch./

-------------------------

This work is licensed under a Creative Commons License
<http://creativecommons.org/licenses/by-nc-sa/2.5/>. All of the news
articles and features on Intellectual Property Watch are also subject to
a Creative Commons License
<http://creativecommons.org/licenses/by-nc-sa/2.5/> which makes them
available for widescale, free, non-commercial reproduction and translation.

You can subscribe for automatic notifications of these stories, via the
RSS feed <http://www.ip-watch.org/weblog/wp-rss2.php> or via the e-mail
alerts <http://www.ip-watch.org/weblog/subscribe.php>. Subscribers can
choose the frequency of notifications as well as particular topics of
greatest interest to them.

--
Judit Rius Sanjuan
Attorney
judit.rius@keionline.org

Knowledge Ecology International (KEI)
www.keionline.org / www.cptech.org
1621 Connecticut Ave, NW, Suite 500 Washington, DC 20009 USA
Tel.: +1.202.332.2670, Ext 18 Fax: +1.202.332.2673