On April 26, the Office of the United States Trade Representative released its 2023 Special 301 Report on the adequacy and effectiveness of the U.S.’ trading partners’ protection and enforcement of intellectual property rights. This annual report details the trade representative’s findings of more than 100 trading partners after significant research and enhanced engagement with stakeholders.
The “Special 301” Report is an annual review of the global state of IP protection and enforcement. USTR conducts this review pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act.
“Innovation and creativity are at the heart of American competitiveness. That is why the Biden-Harris Administration’s new story on trade includes lifting up the 60 million jobs and workers in our IP-intensive industries through robust IP protection and enforcement in foreign countries,” explained US Trade Representative, Ambassador Katherine Tai, introducing the 2023 Report. “Our Administration will continue to engage with the trading partners identified in this year’s Report to empower our inventors, creators, and brands, and to demonstrate that trade can deliver tangible results across the American economy.”
The “Special 301 Process” advances each year
USTR reviewed more than 100 trading partners for this year’s Special 301 Report and placed 29 of them on the Priority Watch List or Watch List.
In this year’s Report, trading partners on the Priority Watch 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. Seven countries are on the USTR’s Priority Watch List, a dark list of distinction all countries should hope to avoid: Argentina, Chile, China, India, Indonesia, Russia, and Venezuela.
These countries will be the subject of particularly intense bilateral engagement during the coming year.
Twenty-two trading partners are on the Watch List, and merit bilateral attention to address underlying IP problems: Algeria, Barbados, Belarus, Bolivia, Brazil, Bulgaria, Canada, Colombia, Dominican Republic, Ecuador, Egypt, Guatemala, Mexico, Pakistan, Paraguay, Peru, Thailand, Trinidad & Tobago, Turkey, Turkmenistan, Uzbekistan, and Vietnam.
Key elements of the 2023 Special 301 Report
USTR added Belarus to the Watch List, in response to Belarus passing a law that legalized unlicensed use of certain copyrighted works if the right holder is from a foreign state “committing unfriendly actions,” including sanctioning Belarus for their role in Russia’s unprovoked invasion of Ukraine. Furthermore, Belarus can keep royalties from this unlicensed usage and shift them to Belarus’s general budget, meaning that the Lukashenka regime would directly financially benefit from this unauthorized usage.
The Special 301 review of Ukraine continues to be suspended due to Russia’s premeditated and unprovoked further invasion of Ukraine in February 2022.
USTR added Bulgaria to the Watch List because it did not sufficiently address deficiencies in its investigation and prosecution of online piracy cases, such as by allowing criminal investigations, expert examinations, and prosecutions to proceed with just a subset of seized infringing works. USTR will again conduct an Out-of-Cycle Review of Bulgaria in 2023 to assess whether Bulgaria makes material progress in this area.
As part of the Biden Administration’s comprehensive effort to combat the COVID-19 pandemic, the United States supported negotiations that resulted in the WTO issuing two Ministerial Decisions in June 2022. One was on the WTO Response to the COVID-19 Pandemic and Preparedness for Future Pandemics. The other was on the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). The United States supports continued discussions at the WTO on this issue, and USTR requested that the US International Trade Commission investigate COVID-19 diagnostics and therapeutics and provide information on market dynamics to help inform the discussion around supply and demand, price points, the relationship between testing and treating, and production and access. That report is due October 17, 2023.
Serious concerns regarding China
There remain many serious concerns regarding IP protection and enforcement in China. In 2022, China continued implementation of amendments to the Patent Law, Copyright Law, and Criminal Law, as well as previous issued measures, but the pace of reforms aimed at addressing IP issues slowed. While right holders have welcomed some positive developments, they raise concerns about the adequacy and effective implementation of these measures, as well as about long-standing issues like technology transfer, trade secrets, bad faith trademarks, counterfeiting, online piracy, and geographical indications. Also, statements by Chinese officials that tie IP rights to Chinese market dominance still raise strong concerns. The United States continues to monitor closely China’s progress in implementing its commitments under the United States-China Economic and Trade Agreement (Phase One Agreement).
Legal reforms in some countries improve IP protection
Several trading partners continued to advance IP protection and enforcement by enacting major legal reforms. For example, Thailand’s amendments to the Copyright Act entered into force in August 2022. Vietnam’s amendments to the IP Code entered into force in January 2023. Nigeria adopted the Copyright Act, 2022 in March 2023.
Some trading partners also joined major international IP treaties. Examples include Thailand and Tunisia acceding to the World Intellectual Property Organization (WIPO) Copyright Treaty (WCT). Tunisia also acceded to the WIPO Performances and Phonograms Treaty (WPPT), and Chile acceded to the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (the Madrid Protocol).
Issues with the European Union persist
Concerns with the European Union’s aggressive promotion of its exclusionary geographical indications (GI) policies persist. The United States continues its intensive engagement in promoting and protecting access to foreign markets for U.S. exporters of products that are identified by common names or otherwise marketed under previously registered trademarks. The United States remains concerned about the proposed expansion of the EU GI system beyond agricultural products and foodstuffs to encompass non-agricultural products, including apparel, ceramics, glass, handicrafts, manufactured goods, minerals, salts, stones, and textiles, as well as the transfer of much of the GI application review process to EU Member States and the reduction of time periods for opposing registration of a GI that is part of the EU’s Common Agricultural Policy that entered into force on January 1, 2023.
Online piracy and broadcast piracy remain ongoing concerns
The 2023 Report continues to highlight ongoing concerns related to online piracy and broadcast piracy. Examples include concerns related to stream-ripping, illicit streaming devices and related piracy apps, cable providers distributing pirated content, and illicit Internet Protocol television (IPTV) services. Stakeholders from both unions and companies in the creative sectors have underscored the importance of copyright protection and enforcement to their livelihoods and businesses.
USTR also continues to press trading partners to address concerns on IP protection and enforcement, including through bilateral engagement under Trade and Investment Frameworks (TIFAs) and through other mechanisms. Examples in 2022 and early 2023 include engagements with Algeria, Argentina, Bangladesh, Central Asia, Chile, China, Egypt, the European Union, Kenya, India, Indonesia, Mexico, Pakistan, the Philippines, Paraguay, Saudi Arabia, Taiwan, Thailand, and Trinidad and Tobago.
USTR is expanding and enhancing engagement with diverse and inclusive groups of stakeholders to consider their perspectives on IP issues. For example, the United States organized workshops with stakeholders on the margins of the Asia-Pacific Economic Cooperation (APEC) meetings in 2023. A roundtable of independent creators, producers, and union workers provided diverse perspectives on the importance of copyright protection and enforcement for promoting inclusive growth in the creative industries. At a workshop on geographical indications, producers that are small or medium-sized enterprises and other stakeholders spoke about the economic benefits of preserving the use of common names and the problems they encounter when common names are not preserved.