USTR 2018 Special 301 Report – Priority Watch List Country – India

In April, the Office of the United States Trade Representative (USTR) released its 2018 Special 301 Report (the Report) identifying trading partners that do not adequately or effectively protect and enforce intellectual property (IP) rights or otherwise deny market access to U.S. innovators and creators that rely on protection of their IP rights.  The Report called on U.S. trading partners to address IP-related challenges with a special focus on the countries identified on the Watch List and Priority Watch List.

Countries identified on the Watch List are:

  • Barbados
  • Bolivia
  • Brazil
  • Costa Rica
  • Dominican Republic
  • Ecuador
  • Egypt
  • Greece
  • Guatemala
  • Jamaica
  • Lebanon
  • Mexico
  • Pakistan
  • Peru
  • Romania
  • Saudi Arabia
  • Switzerland
  • Tajikistan
  • Thailand
  • Turkey
  • Turkmenistan
  • United Arab Emirates
  • Uzbekistan
  • Vietnam

Countries identified on the Priority Watch List are:

  • Algeria
  • Argentina
  • Canada
  • Chile
  • China
  • Colombia
  • India
  • Indonesia
  • Kuwait
  • Russia
  • Ukraine
  • Venezuela

Priority Watch List Country – India

In this post, we will examine several of the USTR’s concerns relating to India which has been on the USTR’s Priority Watch list for decades.  Although the Report acknowledges that despite a number of recent administrative actions taken by the Indian government to try and improve its IP system, the country still has not addressed a number of key, longstanding deficiencies in its IP regime. Not surprisingly, the Report notes that India remains one of the world’s most challenging major economies with respect to the protection and enforcement of IP.

Some longstanding patent issues listed in the Report include:

  1. Narrow patentability standards;
  2. Threats of compulsory licensing and patent revocations;
  3. Overly broad criteria for issuing licenses and revocations under the India Patents Act;
  4. Costly and time-consuming patent opposition hurdles;
  5. Long time lines to receive a patent; and
  6. Excess reporting requirements.

Additionally, the Report further states that in the pharmaceutical and agricultural chemical sectors, India continues to lack an effective system for protecting against the unfair commercial use, as well as the unauthorized disclosure of undisclosed test and other data generated to obtain market approval for such products.  Another contentious area in the pharmaceutical sector involves Section 3(d) of the India Patents Act which provides that the discovery of a “new form” of a “known substance” that does not result in increased efficacy of that substance is not patentable.  This restriction on patent eligible subject matter poses significant obstacles to innovators seeking timely entry into the Indian market for these products.  Moreover, the Report further notes that India continues to lack an effective system for notifying interested parties of marketing approvals for follow-on pharmaceuticals in a sufficient manner that allows for the early resolution of any potential patent disputes.  Moreover, in 2017, the Indian Ministry of Health and Family Welfare created additional uncertainty in the pharmaceutical market when it issued a notification eliminating a requirement from Form 44 which required applicants seeking approval of a drug to declare the patent status of that drug to the regulator.

Other issues involve the pressure faced by innovative industries to localize the development and manufacture of their products due to high custom duties directed to IP-intensive products, such as medical devices, pharmaceuticals, ICT (information, communication, technology) products, solar energy equipment and capital goods.    With respect to agricultural biotechnology, the Report notes that the Ministry of Agriculture and Farmer’s Welfare’s “Licensing and Formats for Genetically-Modified Technology Agreement Guidelines, 2016” contained overly prescriptive terms that, if implemented, would undermine market incentives critical to the agricultural biotechnology and other innovative sectors.

With respect to IP enforcement, the Report notes that India’s overall efforts remain deficient.  Unfortunately, the lack of uniform progress across the country threatens to undercut the positive steps that certain states have taken.  In fact, a 2017 publication produced by the OECD and EU Intellectual Property Office entitled, “Mapping the Real Routes of Trade in Fake Goods,” reported that India was a key producer and exporter of counterfeit foodstuffs, pharmaceuticals, perfumes, cosmetics, textiles, footwear, electronics and electrical equipment, toys, games and sporting equipment. With respect to counterfeit pharmaceuticals, the 2017 publication found that 55 percent of the total value of global counterfeit pharmaceutical seizures originated in India – the largest of any country.  Additionally, the publication also noted that these counterfeit pharmaceuticals are shipped around the world with particular emphasis placed on the African countries, Europe and the U.S.

Not surprisingly, the Report also notes that the overall level of trademark counterfeiting in India also remains high.  Moreover, U.S. brand owners continue to report issues with respect to opposition and cancellation proceedings, as well significant challenges and excessive delays in obtaining trademarks and efficiently utilizing opposition and cancellation proceedings as well as issues with the quality of examination.  Moreover, uncertainty continues to exist for companies due to insufficient legal means to protect trade secrets in the country.

It appears that unless significant changes are made and strongly implemented by the Indian government to specifically address these above issues that the country will remain on the Priority Watch list for the foreseeable future.

This post was written by Lisa Mueller.

USTR 2018 Special 301 Report: Pharmaceutical and Medical Device Innovation and Market Access

Last month, the Office of the United States Trade Representative (USTR) released its 2018 Special 301 Report (the Report), identifying trading partners that do not adequately or effectively protect and enforce intellectual property (IP) rights or otherwise deny market access to U.S. innovators and creators that rely on protection of their IP rights.  The Report calls on U.S. trading partners to address IP-related challenges with a special focus on the countries identified on the Watch List and Priority Watch List.

Countries identified on the Watch List are:

  • Barbados
  • Bolivia
  • Brazil
  • Costa Rica
  • Dominican Republic
  • Ecuador
  • Egypt
  • Greece
  • Guatemala
  • Jamaica
  • Lebanon
  • Mexico
  • Pakistan
  • Peru
  • Romania
  • Saudi Arabia
  • Switzerland
  • Tajikistan
  • Thailand
  • Turkey
  • Turkmenistan
  • United Arab Emirates
  • Uzbekistan
  • Vietnam

Countries identified on the Priority Watch List are:

  • Algeria
  • Argentina
  • Canada
  • Chile
  • China
  • Colombia
  • India
  • Indonesia
  • Kuwait
  • Russia
  • Ukraine
  • Venezuela

With respect to pharmaceutical and medical device innovation and market access, the Report details the efforts of the USTR over the last year to engage with trading partners to ensure that U.S. IP owners have a full and fair opportunity to use and profit from their IP, including by the promotion of transparent and fair pricing and reimbursement systems.  In addition to ensuring that trading partners have robust IP systems, the USTR has sought to reduce market access barriers to pharmaceutical products and medical devices, including measures that discriminated against U.S. companies, were not adequately transparent or did not offer sufficient opportunity for meaningful stakeholder engagement.  Additionally, the USTR pressed trading partners to appropriately recognize the value of innovative medicines and medical devices so that these partners can fairly contribute their share to the research and development of new treatments and cures.  USTR activities with respect to specific countries are described in more detail below:

  • Canada and Mexico: Sought strong IP provisions during the renegotiation and modernization of the North American Free Trade Agreement (NAFTA) including seeking provisions that ensure the national-level government processes for the listing and reimbursement of pharmaceutical products and medical devices are transparent, provide procedural fairness, are nondiscriminatory and provide full market access for U.S. products.
  • South Korea: Sought to obtain, through negotiations, improvement and better implementation by South Korea of the U.S.-Korea Tree Trade Agreement (KORUS FTA).  Specifically, the USTR sought to obtain Korea’s commitment to better implement its KORUS FTA commitments to provide fair and non-discriminatory treatment of pharmaceutical products, including imported products, under certain medical pricing and reimbursement programs.
  • Japan: Engaged with Japan in the context of the U.S.-Japan Economic Dialogue to ensure transparency and fairness and address other concerns with respect to pharmaceutical and medical devices pricing and reimbursement policies.
  • China: Pressed China on a range of issues that impact and affect the pharmaceutical sector.  These included: providing for effective protection against unfair commercial use, unauthorized disclosure of test and other data generated to obtain marketing approval for pharmaceutical products, as well as expediting the implementation of an effective mechanism for the early resolution of potential patent disputes.
  • India: Engaged with India to secure meaningful IP reforms on a number of longstanding issues. These issues included:  criteria for patentability and compulsory licensing as well as protection against unfair commercial use, as well as unauthorized disclosure of test or other data generated to obtain marketing approval for pharmaceutical products.
  • Indonesia: Engaged Indonesia to resolve a number of concerns regarding revisions to Indonesia’s patent law. These revisions included:  criteria for patentability, local manufacturing and use requirements and the grounds and procedures for issuing compulsory licenses.
  • Argentina: Engaged Argentina with respect to concerns regarding the scope of patentable subject matter and effective protection against unfair commercial use, as well as unauthorized disclosure of undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products.
  • Saudi Arabia: Engaged Saudi Arabia regarding its protection and enforcement of patents and effective protection against commercial use as well as the unauthorized disclosure of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products.
  • United Arab Emirates: Sought confirmation that the United Arab Emirates will continue to protect pharmaceuticals through local procedures and the Gulf Cooperation Council (GCC) patent system.

The Report also highlights concerns regarding IP protection and enforcement and market access barriers affecting U.S. entities that rely on IP protection, including those in the pharmaceutical and medical device industries.  Examples of such barriers by trading partners include:

  • Unfair issuance, threat of issuance, or the encouragement of others to issue compulsory licenses. Trading partners being monitored with respect to such activities include Chile, Colombia, El Salvador, India and Malaysia.
  • Employment of measures that are discriminatory, nontransparent, or otherwise trade-restrictive that have the potential to hinder market access in the pharmaceutical and medical device sectors and which might potentially result in higher product costs. Examples include unreasonable regulatory approval delays and non-transparent reimbursement policies (such as pricing and reimbursement systems which are non-market-based or that do not otherwise appropriately recognize the value of innovative medicines and medical devices).  Trading partners being monitored with respect to such activities include Algeria, Australia, Canada, Japan, Korea, Turkey and New Zealand.

In our next few posts, we will examine in detail the USTR’s findings with the countries on the Priority Watch List.

This post was written by Lisa Mueller.