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TPP Can Help Combat Counterfeiting in FTZs, USTR’s Notorious Markets Report States

Monday, December 21, 2015
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative has released the results of its Special 301 out-of-cycle review of notorious markets for 2015. This review identifies dozens of physical and online marketplaces that reportedly engage in and facilitate substantial copyright piracy and trademark counterfeiting. This year’s report also highlights emerging trends in the marketing and distribution of counterfeit goods online.

Markets on this year’s list are hosted or located in Argentina, Brazil, the British Virgin Islands, Canada, China, France, India, Indonesia, Mexico, the Netherlands, Nigeria, Panama, Paraguay, Russia, Spain, Switzerland, Thailand and Ukraine. USTR notes that again this year it received fewer nominations for physical markets than in the past, particularly from copyright-intensive industries. Several com­menters focused exclusively on notorious markets online due to the rise of digital distribution and online infringement, but at the same time USTR is concerned by new reports of notorious physical markets in Turkey, the United Arab Emirates, Kuwait, Vietnam and Spain.

USTR states that in 2015 some of the listed online markets are reported to have undertaken var­ious measures that demonstrated a willingness to cooperate in addressing infringement, such as providing streamlined notice and takedown procedures, expediting responses to complaints, completing licensing arrangements with rights holders, and engaging with rights holders to de­velop additional cooperative procedures. Several previously-listed online markets reportedly closed or experienced disruption, while others were the subject of significant domestic and international law enforcement efforts.

According to the report, large free trade zones have become enablers for counterfeit activities and are being used as a staging ground to disguise the illicit nature of counterfeit goods, to add infring­ing trademarks, logos and packaging to products, and to conceal the origin of counterfeit goods. The report states that the Trans-Pacific Partnership includes provisions that would require parties to make criminal procedures and penalties applicable in their FTZs for willful counterfeiting and piracy on a commercial scale, for willful importation and exportation of counterfeit and pirated goods on a commercial scale, and for the willful importation of labels and packaging that use others’ trademarks without authorization in relation to goods or services that are identical to goods or services for which the trademark is registered.

Inclusion on the Notorious Markets List does not reflect a finding of a violation of law or the U.S. government’s analysis of the general IPR protection and enforcement climate in the country concerned, which instead is presented in the annual Special 301 report issued at the end of April. However, the U.S. does encourage all responsible authorities to intensify efforts to combat piracy and counterfeiting and to use the information contained in the Notorious Markets List to pursue legal actions where appropriate. In addition, USTR continues to monitor markets that have been removed from the list and may re-list them if there is a change in circumstances.

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