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USTR Releases 2010 Special 301 Report on Intellectual Property Rights

Washington, D.C. – The Office of the United States Trade Representative (USTR) today released its annual “Special 301” Report on the adequacy and effectiveness of U.S. trading partners’ protection of intellectual property rights (IPR). The Special 301 Report provides a means for the United States to communicate its concerns about the need to protect and enforce IPR. Fighting IPR theft in overseas markets is critical to the livelihoods of the estimated 18 million Americans who work in intellectual property-intensive industries.   

“Intellectual property theft in overseas markets is an export killer for American businesses and a job killer for American workers here at home. USTR’s Special 301 report is important because it serves as the foundation for a year-round process used to secure meaningful reforms that bolsters our exports and supports American jobs in IPR-intensive industries,” said Ambassador Ron Kirk. “I am pleased that this year’s Special 301 Report will highlight several successes in the fight against intellectual property theft. The Czech Republic, Hungary, and Poland have taken significant steps to clamp down on piracy and counterfeiting and will be removed from the Watch List.”   

Today’s positive report on these three countries follows recent successes in both Israel and Saudi Arabia, which were the result of consistent engagement using the Special 301 process. The Report also reflects the Administration’s resolve to encourage and maintain effective IPR protection and enforcement worldwide.   

Again this year, USTR’s Special 301 Report highlights the prominence of IPR concerns with respect to China.   

“We are seriously concerned about China’s implementation of ‘indigenous innovation’ policies that may unfairly disadvantage U.S. IPR holders. Procurement preferences and other measures favoring ‘indigenous innovation’ could severely restrict market access for American technology and products,” said Ambassador Kirk. “Creating an environment that nurtures innovation and entrepreneurship is a worthy goal, but China must maintain a level playing field.”   

The Report identifies a wide range of other serious concerns, ranging from the severe problems of piracy and counterfeiting in China, to the challenge of Internet piracy in other countries, to ongoing systemic IPR enforcement shortcomings in many trading partners.   

As noted above, key significant developments in this year’s Special 301 Report include the following:   

  • Czech Republic – The Czech Republic is being removed from the Special 301 Watch List because of significant progress made over the past two years to control effectively its border markets. Moreover, a new criminal code raising the maximum penalties for IPR related crimes from 2 to 8 years imprisonment and criminalizing the manufacture and storage of counterfeit items came into effect January 1, 2010. The United States will continue to monitor whether the new law results in the imposition of deterrent penalties.

  • Hungary – Hungary is being removed from the Special 301 Watch List in recognition of the significant improvements on enforcement and other actions taken during the past year. Hungary has taken proactive steps to address the growing threat of Internet piracy, and its customs and police officials have developed their ability to effectively identify infringing products. Through effective and consistent enforcement actions, Hungary has closed its notorious Verseny street market, which was home to an array of illegitimate products. Furthermore, Hungary has taken effective measures to protect IPR, including numerous public awareness-raising campaigns, and training and educational seminars for police, prosecutors, and judges. The United States will continue to monitor Hungary’s progress to ensure that IPR protection and enforcement improvements are ongoing.

  • Poland – Poland is being removed from the Special 301 Watch list in recognition of a significant reduction in the availability of pirated and counterfeit goods at border markets, increased and improved enforcement efforts, and strong cooperation between rights holders and enforcement officials. The government has also taken initial steps to address Internet piracy concerns. The United States will continue to monitor Poland’s progress to ensure that IPR protection and enforcement improvements are ongoing. 

USTR also announced that it will conduct Out-of-Cycle Reviews for the Philippines and Thailand to monitor progress on specific IPR issues, which will allow us to deepen our IPR dialogue and cooperation with two key trading partners.   

BACKGROUND   

USTR reviewed 77 trading partners for this year’s Special 301 Report, and placed 41 countries on the Priority Watch List, Watch List, or the Section 306 monitoring list.   

The Special 301 designations and actions announced in the Special 301 Report are the result of close consultations with affected stakeholders, interested parties, foreign governments, and Congress, as well as discussions between interested federal agencies.   

This year USTR enhanced its public engagement activities, which yielded 571 written comments from interested parties, a significant increase from 2009. USTR made the submissions it received available to the public online at www.regulations.gov, docket number USTR-2010-0003. In addition, on March 3, 2010, USTR conducted a public hearing to let interested persons inform the interagency Special 301 Subcommittee of issues relevant to the review. The hearing included testimony from 23 witnesses, ranging from foreign governments to industry representatives to non-governmental organizations. A transcript of the hearing is available here.   

Trading partners on the Priority Watch List do not provide an adequate level of IPR protection or enforcement, or market access for persons relying on intellectual property protection. China, Russia, Algeria, Argentina, Canada, Chile, India, Indonesia, Pakistan, Thailand, and Venezuela are on the Priority Watch List. These countries will be the subject of particularly intense engagement through bilateral discussion during the coming year.   

Twenty-nine trading partners are on the lower-level Watch List, meriting bilateral attention to address underlying IPR problems: Belarus, Bolivia, Brazil, Brunei, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, Finland, Greece, Guatemala, Italy, Jamaica, Kuwait, Lebanon, Malaysia, Mexico, Norway, Peru, Philippines, Romania, Spain, Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan, and Vietnam.   

Paraguay will continue to be subject to Section 306 monitoring under a bilateral Memorandum of Understanding that establishes objectives and actions for addressing IPR concerns in that country.   

Our process of broad consultations is designed to ensure that Special 301 decisions are based on a robust understanding of often complex intellectual property issues and to help facilitate sound, well-balanced assessments of developments in particular countries. USTR necessarily conducts this assessment on a case-by-case basis, based on the particular facts and circumstances that shape IPR protection and enforcement regimes in specific countries. As discussed in the Report, USTR will continue to work closely with the governments of listed countries.