Protection of Intellectual Property Rights

Protection Under Domestic Laws

Most countries have domestic laws to protect intellectual property rights. In the United States, Section 337 of the Tariff Act of 1930 authorizes the International Trade Commis­sion (ITC) to institute an investigation into the importation of articles that may infringe on U.S patents, trademarks, or copyrights. If the ITC determines that a violation exists, U.S. Customs and Border Protection (CBP) is then charged to enforce an exclusive order, that is, to stop the article from entering the United States; upon a subsequent violation, the prop­erty may be seized and forfeited to the U.S government. Since 1972, 505 individual cases of alleged IPR violations have been filed against non-U.S. firms in forty countries. More than 70 percent of these section 337 cases were decided in favor of the complainant (Chiang, 2004). Unlike in antidumping and countervailing duties cases, in which domestic injury must be proved, the U.S. Department of Commerce does not play a role in IPR cases.

Section 301 of the 1974 U.S. Trade Act contains significant measures to ensure trade compliance. It allows the United States to apply trade sanctions to countries that im­pose an unjustifiable burden on or restrict U.S. commerce. Such burdens include but are not limited to denial of fair and equitable market opportunities such as denial of most-favored-nation treatment (MFN) to U.S. goods and services, lack of adequate and effective protection of IPRs (including those in countries that are part of the Uruguay Round Agreement on Trade-Related Aspects of Intellectual Property [TRIPs], signed in 1994), export targeting, and denial of workers’ rights. A section 301 investigation may be commenced by the U.S. Trade Representative’s Office (USTR) or any interested party that files a petition with the USTR. The USTR must conclude its investigation within a certain period after initiation of an investigation. It may authorize retaliatory action against the foreign country.

Special 301 focuses on unfair IPR practices. The Special 301 Provision of the 1988 Om­nibus Trade and Competitiveness Act requires the U.S. Trade Representative to identify by April 30 of each year countries that fail to provide adequate protection and enforcement for intellectual property rights or deny fair and equitable market access to persons that rely on IPR protection. The USTR classifies countries that fail to provide adequate protection or enforcement into the following three categories:

  • Countries under Priority Watch List: Countries whose policies or practices have the greatest adverse impact ( actual or potential ) on the relevant U.S. products, and which are not engaged in good-faith negotiations to address these problems
  • Countries under Watch List: Countries with serious IPR deficiencies but which are not yet placed on the priority watch list.
  • Countries under Section 301 Monitoring: Countries that are monitored for implemen­tation of certain agreements or memorandum of understanding on IPR.
  • The USTR classifies countries that fail to provide adequate protection or enforcement into one of three categories: priority foreign country, priority watch list, or watch list (International Perspective 20.2).

1. Countries Under Priority Watch List

A country may be designated as a priority foreign country if:

  • Its policies or practices have the greatest adverse impact (actual or potential) on the relevant U.S. products
  • It is not engaged in good faith negotiations to address these problems.

U.S. Customs and Border Protection has the authority to prohibit the importation of imports that violate intellectual property rights. IPRs subject to protection have to be registered with the U.S. Patent and Trademark Office. CBP monitors imports to prevent the importation of violating articles in response to the IPR owner’s request or on its own
initiative. Customs regulations establish the authority for CBP to record trademarks, trade names, and copyright; to seize counterfeit articles that violate IPRs; and to restrict the importation of gray-market imports. The port director has the authority to demand the redelivery of violating articles and to claim liquidated damages in the event of failure to redeliver the goods. CBP also monitors importations of articles (for a fee) on a nationwide basis and reports to the patent holder the names and addresses of importers of infringing goods.

The USTR is required to initiate a Section 301 investigation within thirty days after iden­tification of a priority foreign country. If negotiations are not successful within six to nine months, the USTR may retaliate against the exports of the country by withdrawing trade agreement concessions and imposing duties or other restrictions on imports. In this cate­gory are countries whose protection and enforcement of IPRs warrant close monitoring and resolution. The 2012 list of countries under this category included Argentina, Chile, China, Egypt, India, Indonesia, and Russia.

2. Watch List

This category includes a list of countries that warrant special attention because they main­tain certain practices or barriers to market access for intellectual property products that are of particular concern. The 2012 list included Belarus, Bolivia, Colombia, Turkey and Vietnam.

It is important to note that a Special 301 investigation is similar to an investigation initi­ated in response to an industry Section 301 petition (unfair foreign trade practices), ex­cept that the maximum time allowed for the latter is shorter (in cases involving violation of TRIPs) than for other Section 301 investigations. Special 301 is potentially an effective tool to protect U.S. IPRs abroad because it allows the administration to use a variety of trade sanctions (e.g., removal of GSP or MFN status) against a priority foreign country. However, its implementation has been sporadic and inconsistent over the years. For example, certain countries with gross violations of IPRs are not included on the priority country list, and in some cases, when they are identified, they do not face sanctions. Russia was classified as a watch list country for many years in spite of its rampant black markets in DVDs, films, music, and so forth. India was classified under the priority foreign country category several times, but no sanctions were imposed even though there was no resolution of the problem through bilateral negotiations.

Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.

1 thoughts on “Protection of Intellectual Property Rights

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