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US puts India on Priority Watch list- USTR Special 301 Report

May 3, 2021

The Office of the United States Trade Representative (USTR) on April 30, 2021 has released its Special 301 Report of 2021[1]. The USTR annually releases the Report highlighting the various adequacies, effectiveness as well as shortcomings in the Intellectual Property protection and enforcement regime of various countries which are the Trading partners of the US.

The USTR while releasing the Report remarked that it has reviewed more than one hundred trading partners and placed thirty-two of them on either the Priority Watch List or Watch List.

India has again been put under the Priority Watch List by the USTR, which implies that India’s IPR law, protection and enforcement strategies will be a subject of particularly intense bilateral engagement during the coming year.

Other countries which have featured in the Priority watch list are Argentina, Chile, China, Indonesia, Russia, Saudi Arabia, Ukraine, and Venezuela.

The entire report in detail can be accessed here.

Take Away from Special 301 Report- India

Counterfeit medicines

The Report speaks at length about India being a source of counterfeit medicines. It remarks that the majority of all counterfeit pharmaceuticals seized at the U.S. border in FY 2020 were shipped from or trans shipped through China, Hong Kong, India, Canada, and the Dominican Republic. It also highlights that a recent study by OECD and EUIPO found that China, India, the Philippines, Vietnam, Indonesia, and Pakistan were the leading sources of counterfeit medicines distributed globally.

Inadequate IP Laws

India’s IP protection and enforcement has been recognized as inadequate and as one of the world’s most challenging major economies with respect to IP protection and enforcement. Some of drawbacks listed in the report are:

Slow opposition or cancellation proceedings.

  • Potential threat of patent revocations, lack of presumption of patent validity, and the narrow patentability criteria under the India Patents Act burden companies across different sectors.
  • Patent applicants continue to confront costly and time-consuming pre- and post-grant oppositions, long waiting periods to receive patent approval, and excessive reporting requirements.
  • Vagueness in the interpretation of the India Patents Act.
  • Restriction on patent-eligible subject matter in Section 3(d) of the India Patents Act and its impact on incentivizing innovation that benefits Indian patients.
  • Weak enforcement of IP by the courts and police officers, a lack of familiarity with investigation techniques, and the continued absence of any centralized IP enforcement agency, combined with a failure to coordinate actions on both the national and state level, threaten to undercut any progress made.

India a home for markets that facilitate counterfeiting and piracy

India remains home to several markets that facilitate counterfeiting and piracy, as identified in the 2020 Notorious Markets List.

Notorious Markets List 2021 for Counterfeiting

Administrative Inadequacies

U.S. brand owners continue to report excessive delays in trademark opposition proceedings and a lack of quality in examination.

Little clarity concerning whether trademark owners can apply directly for recognition of “well-known” trademark status without having to rely on Indian court decisions.

Trade secret protection

The USTR also mentions about India’s lack of laws relating to trade secret protection. It reports that Companies also continue to face uncertainty caused by insufficient legal means to protect trade secrets in India. It remarks that as of 2021 there are no civil or criminal laws in India which specifically addresses the protection of trade secrets protection in India.

Copyright and Piracy

With reference to copyright holders in US, the report states that the Copyright owners report high levels of online piracy.

It also speaks about the draft Copyright Amendment Rules of 2019 which proposes broadening the scope of statutory licensing to encompass not only radio and television broadcasting but also online transmissions. The Report raises the concern that if the Rules are enforced then the Amendment Rules would have severe implications for right holders who make their content available online.

Some positive IP developments reported by USTR

  • India’s accession to the World Intellectual Property Organization (WIPO) Internet Treaties in 2018 and the Nice Agreement in 2019.
  • India took steps to address stakeholder concerns over burdensome patent reporting requirements by issuing a revised Manual of Patent Office Practice and Procedure in November 2019 and revised Form 27 on patent working in October 2020. The Manual includes the requirement for patent examiners to look to the WIPO Centralized Access to Search and Examination (CASE) system and Digital Access Service (DAS) to find information filed by patent applicants in other jurisdictions, with the aim of eliminating the need for applicants to file redundant information with India.
  • In September, 2019, the Nice Agreement for the classification of goods and services for the purposes of registering trademarks came into force, and India continues to work on guidelines for its implementation.
  • The Cell for IPR Promotion and Management (CIPAM) continues to promote IP awareness, commercialization, and enforcement throughout India.
  • In December 2020, the United States Patent and Trademark Office and DPIIT signed a new Memorandum of Understanding relating to IP technical cooperation mechanisms.
  • In March 2021, the United States and India, along with Australia and Japan, announced the Quad Vaccine Partnership. They are taking shared action necessary to expand safe and effective COVID-19 vaccine manufacturing in 2021 and are working together to strengthen and assist countries in the Indo-Pacific with vaccination, in close coordination with the existing relevant multilateral mechanisms including the World Health Organization (WHO) and COVID-19 Vaccines Global Access (COVAX).
  • Indian manufacturers have entered into voluntary licensing agreements with international partners to produce billions of COVID-19 vaccine doses. The United States intends to continue to engage with India on IP matters, including through the United States-India Trade Policy Forum’s Intellectual Property Working Group.

Conclusion

India’s IP regime for protection and enforcement of IP rights has always been under the scanner and this is not the first time that India has featured in USTR’s Priority watch list. The past year was a bumpy one for one and all. While health of citizens became paramount concern, India also witnessed some significant changes in the IPR laws favouring the start-ups and innovators in India.

The menace of counterfeiting and piracy acts as a major catalyst in fizzing India’s position with respect to IPR protection. The report also remarks about IPAB’s disbandment and remarks that the United States is closely monitoring legislation proposed in early 2021 that seeks to abolish the IPAB and a temporary ordinance promulgated in April 2021 that effectively disbands the IPAB.

[1] https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/april/ustr-releases-annual-special-301-report-intellectual-property-protection

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