Patent Docs: U.S. Trade Representative Releases 2020 Special 301 Report

 

On April 29th, Ambassador Robert Lighthizer, U.S. Trade Representative (USTR), issued the 2020 Special 301 Report. 

 

According to the Executive Summary of the Report, "[a] top trade priority for the Trump Administration is to use all possible sources of leverage to encourage other countries to open their markets to U.S. exports of goods and services, and provide adequate and effective protection and enforcement of U.S. intellectual property (IP) rights."  In tune with the more combative rhetoric on trade adopted by the Trump Administration, the Summary repeats last year’s exhortation that:

 

This Report provides an opportunity to call out foreign countries and expose the laws, policies, and practices that fail to provide adequate and effective IP protection and enforcement for U.S. inventors, creators, brands, manufacturers, and service providers.  The identification of the countries and IP-related market access barriers in the Report and of steps necessary to address those barriers are a critical component of the Administration's aggressive efforts to defend Americans from harmful IP-related trade barriers.

 

The Report is promulgated under U.S. law that requires the Trade Representative to "identify those countries that deny adequate and effective protection for IPR or deny fair and equitable market access for persons that rely on intellectual property protection."  The Trade Representative has implemented these provisions by creating a "Priority Watch List" and "Watch List."  Placing a country on the Priority Watch List or Watch List is used to indicate that the country exhibits "particular problems . . . with respect to IPR protection, enforcement, or market access for persons relying on intellectual property."  These watch lists are reserved for countries having "the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on the relevant U.S. products."

 

The USTR identified ten countries on a "Priority Watch List" and another 23 countries on the "Watch List,” all relating to deficiencies in intellectual property protection in these countries.  The Priority Watch List in the 2020 Report includes Algeria, Argentina, Chile, China, India, Indonesia, Russia, Saudi Arabia, Ukraine and Venezuela. Countries on this list "present the most significant concerns this year regarding insufficient IP protection or enforcement or actions that otherwise limited market access for persons relying on intellectual property protection."  On the Watch List this year are Barbados, Bolivia, Brazil, Canada, Colombia, Dominican Republic, Ecuador, Egypt, Guatemala, Kuwait, Lebanon, Mexico, Pakistan, Paraguay, Peru, Romania, Thailand, Trinidad & Tobago, Turkey, Turkmenistan, the United Arab Emirates, Uzbekistan and Vietnam. The Report also notes efforts with several countries (including Argentina, Australia, Canada, China, Colombia, Ecuador, Egypt, Indonesia, Japan, Korea, Mexico, New Zealand, Saudi Arabia, Thailand, Turkey, the United Arab Emirates (UAE), and Vietnam) “to address concerns related to IP protection, IP 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 Report cites "restrictive patentability criteria that undermine opportunities for export growth" (Argentina, India, and Indonesia) and "a lack of effective protection against unfair commercial use, as well as unauthorized disclosure, of test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products" (Argentina, China, Egypt, India, and Saudi Arabia).

 

The Report cites China, India, Indonesia and Chile for particular consideration upon being placed on the Priority Watch List:. Regarding China, the Report cites “U.S. concerns with China’s system of pressuring and coercing technology transfer, and the continued need for fundamental structural changes to strengthen IP protection and enforcement, including as to trade secret theft, obstacles to protecting trademarks, online piracy and counterfeiting, the high-volume manufacturing and export of counterfeit goods, and impediments to pharmaceutical innovation.” But the Report also states that “[o]ver the past year, the United States’ engagement of China began to demonstrate key progress with the signing of the U.S. – China Economic and Trade Agreement in January 2020, which the Report maintains “requires changes in China’s acts, policies, and practices, including structural reforms and other changes to China’s legal and regulatory regime to address numerous longstanding concerns of a wide range of U.S. industries.”

 

India is cited for "lack of sufficient measurable improvements to its IP framework on long-standing and new challenges that have negatively affected U.S. right holders over the past year," which include ones that "make it difficult for innovators to receive and maintain patents in India, particularly for pharmaceuticals . . .."  The Report newly asserts that,”[i]n addition to these long-standing concerns, India also further restricted the transparency of information provided on state-issued pharmaceutical manufacturing licenses, continues to apply restrictive patentability criteria to reject pharmaceutical patents, and still has not established an effective system for protecting against the unfair commercial use, as well as the unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceuticals and certain agricultural chemical products.”

 

Once again this year, the Report highlights compulsory licensing as a particular concern with regard to pharmaceuticals and medical devices, because these practices are antithetical to “promot[ing] affordable healthcare for American patients today and innovation to preserve access to the cutting-edge treatments and cures that they deserve tomorrow."  The Report states that “[s]uch actions can undermine a patent holder’s IP, reduce incentives to invest in research and development for new treatments and cures, unfairly shift the burden for funding such research and development to American patients and those in other markets that properly respect IP, and discourage the introduction of important new medicines into affected markets.” Compulsory licenses should be issued in “extremely limited circumstances” and only after the government (and presumably the patent rights holder) has made “every effort” to obtain the patent owners’ authorization on commercially reasonable terms.

 

The Report notes that stakeholders from the pharmaceutical and medical device industries have identified industries that have expressed concerns regarding the policies of several trading partners, including Algeria, Australia, Canada, China, Japan, Korea, New Zealand, and Turkey with regard to "issues related to pharmaceutical innovation and market access," citing specific examples falling within these general categories for each country.

 

As it has for the past several years (and across otherwise very different Administrations), the U.S. Trade Representative Special 301 Report provides insights into both the concerns of U.S. IP rights holders and the Administration's intentions to work with, cajole, coerce, or threaten other countries to increase protection for IP rights of U.S. IP rights holders.  For anyone paying adequate attention to these Reports year-to-year, the complaints, and even the language enunciating these complaints, remains dispiritingly the same, suggesting that despite pronouncements of small victories efforts to reduce unfair trade practices globally have fallen far short.  Nevertheless, as with last year's Report, the tone and tenor of this Report is robustly assertive regarding IP rights and America's intention to negotiate international agreements and confront its trading partners in ways that protect American innovation and commercial interests first and foremost regardless of consequences.

---

Kevin Noonan is a partner with the law firm McDonnell Boehnen Hulbert & Berghoff LLP and represents biotechnology and pharmaceutical companies on a myriad of issues. A former molecular biologist, he is also the founding author of the Patent Docs weblog, http://patentdocs.typepad.com/.