The Office of the United States Trade Representative (USTR) released its annual Special 301 Report on the adequacy and effectiveness of trading partners’ protection of intellectual property rights.

The US has again placed India on the ‘Priority Watch List’ for lack of sufficient measurable improvements to its intellectual property framework on the “long-standing” and “new challenges” that have negatively affected American right holders over the past year.

The US placed 10 countries, including some of its major trading partners like India and China, on the list, alleging that enforcement of the intellectual properties have deteriorated or remained at inadequate levels and the Americans who rely on their protection have difficulty with fair and equitable market access.

The countries placed on the list by the Trump administration on intellectual property (IP) related issues are Algeria, Argentina, Chile, China, India, Indonesia, Russia, Saudi Arabia, Ukraine and Venezuela.

Kuwait has been removed from last year’s list that included 11 countries. In 2019, the US had removed Canada and Thailand from the list.

What is the Special 301 report?

The Special 301 Report (Report) is an annual review of the state of IP protection and enforcement in US trading partners around the world, which the Office of the United States Trade Representative (USTR) conducts pursuant to Section 182 of the Trade Act of 1974. 

According to the report, it provides an opportunity to call out foreign countries and to expose the laws, policies, and practices that fail to provide adequate and effective IP protection and enforcement for US inventors, creators, brands, manufacturers, and service providers. 

Countries are placed on ‘Priority Watch List’ if deficiencies in IP rights protection are serious. The US government carries out bilateral discussions with such countries to try to resolve the problems identified, with a view to elevating or lowering the country’s position in the report depending on the outcome. 

Why is India placed on the list?

In its report, the USTR said that India had been placed on the ‘Priority Watch List’ for lack of sufficient measurable improvements to its IP framework on the “long-standing” and “new challenges” that have negatively affected US right holders over the past year.

Long-standing IP challenges facing US businesses in India include those which make it difficult for innovators to receive, maintain, and enforce patents in India, particularly for pharmaceuticals, copyright policies that fail to incentivise the creation and commercialisation of content, and an outdated and insufficient trade secrets legal framework, it said.

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, it said.

And, it still has not established an effective system for protecting against the unfair commercial use, as well as the unauthorised disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceuticals and certain agricultural chemical products, the USTR claimed.

The USTR said that over the past year, India has been inconsistent in its progress on IP protection and enforcement.

While India’s enforcement of IP in the online sphere has gradually improved, a lack of concrete benefits for innovators and creators persists, which continues to undermine their efforts, the report said.

India remains one of the world’s most challenging major economies with respect to protection and enforcement of IP, it said.

The USTR said that in the pharmaceutical sector, Section 3(d) of the India Patents Act remained problematic. One implication of its restriction on patent-eligible subject matter is the failure to incentivise innovation that would lead to the development of improvements with benefits for Indian patients.

India still lacks an effective system for notifying interested parties of marketing approvals for follow-on pharmaceuticals, which would allow for the early resolution of potential patent disputes, it said.

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