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Special 301 IPR Report Drops Italy, Warns of Trade Secret Theft

Monday, May 05, 2014
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative has released its 25th annual Special 301 report on the adequacy and effectiveness of U.S. trading partners’ protection and enforcement of intellectual property rights. This year’s report reviews 82 trading partners and lists 37 of them as meriting particular concern. USTR notes that Chile, China, India, Indonesia, Thailand and Turkey have been listed every year since the report’s inception in 1989.

According to USTR, the 2014 report identifies a wide range of concerns, including (1) inadequacies in trade secret protection in China, India and elsewhere, as well as an increasing incidence of trade secret misappropriation; (2) “indigenous innovation” policies that may unfairly disadvantage U.S. rights holders in China; (3) copyright piracy over the Internet in countries such as Brazil, China, India and Russia; (4) music licensing and satellite broadcasting in the Caribbean; and (5) market access barriers, including non-transparent, discriminatory or otherwise trade-restrictive measures, that appear to impede access to healthcare.

Positive Developments. The report identifies the following positive developments over the past year.

- The WIPO Internet Treaties entered into force for Algeria on Jan. 31, 2014.

- Amendments to China’s Trademark Law were enacted in August 2013, including provisions to combat trademark squatting, expand protection to sound marks, permit multi-class registration, and streamline application and appeal procedures.

- The European Commission introduced in November 2013 a proposal for a directive that would harmonize civil trade secret law throughout the European Union.

- Israel passed in January 2014 patent legislation that satisfied its remaining commitments under a 2010 memorandum of understanding with the United States.

- New Italian regulations to combat copyright piracy over the Internet, which provide notice and takedown procedures that incorporate due process safeguards and establish a mechanism for addressing large-scale piracy, entered into force on March 31, 2014.

- Paraguay created a National Directorate of Intellectual Property to oversee the administration of copyrights, trademarks, patents, industrial designs and geographic indications and authorized the directorate’s enforcement arm to conduct administrative investigations and initiate proceedings at customs checkpoints and businesses.

No Further Action on Ukraine. Ukraine was designated a priority foreign country in the 2013 Special 301 report due to its persistent failure to meet its commitments to improve IPR protection, a severe deterioration of enforcement in the areas of government use of pirated software and piracy over the Internet, and the denial of fair and equitable market access through the authorization and operation of copyright collecting societies. In February 2014 USTR concluded a Section 301 investigation of Ukraine by determining that its acts, policies and practices are unreasonable and burden or restrict U.S. commerce. However, due to the current political situation in Ukraine, no action as a result of that determination has yet been taken.

Priority Watch List. The following ten countries remained on the Priority Watch List because they present the most significant concerns regarding insufficient IPR protection or enforcement or otherwise limit market access for persons relying on IPR protection: Algeria, Argentina, Chile, China, India, Indonesia, Pakistan, Russia, Thailand and Venezuela.

Watch List. Italy has been removed from the Watch List due to the adoption of regulations to combat copyright piracy over the Internet as well as an overall improvement in the climate for IP-intensive industries. The Philippines and Israel were removed from the Watch List earlier this year. Countries remaining on the Watch List include Barbados, Belarus, Bolivia, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, Finland, Greece, Guatemala, Jamaica, Kuwait, Lebanon, Mexico, Paraguay, Peru, Romania, Tajikistan, Trinidad and Tobago, Turkey, Turkmenistan, Uzbekistan and Vietnam. No countries were added to the Watch List this year.

Out-of-Cycle Reviews. USTR will conduct out-of-cycle reviews of India, Kuwait and Paraguay and will continue an OCR of Spain initiated in 2013. In addition, USTR will conduct its next OCR of notorious markets this fall.

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