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.