An Overview of the USTR’s 2016 Special 301 Report on the State of IPR in India

In this week’s post, the BRIC Wall Blog continues to examine the Office of the United States Trade Representative (USTR) 2016 Special 301 Report (Report) released on April 12, 2016. The Report reviewed the state of intellectual property rights (IPR) protection and enforcement in U.S. trading partners around the world, and following extensive research and analysis, placed eleven (11) countries on the priority watch list and twenty-three (23) on the watch list. India is one of the 11 countries on the Priority Watch List in 2016. Although India has made efforts to improve its IPR, and the Indian courts retain their reputation for providing fair and deliberate treatment of both foreign and domestic litigants, long-standing and systemic deficiencies remain, in particular, in the pharmaceutical industry. Just yesterday, the Union Cabinet approved the National Intellectual Property Rights Policy, and a body of government-selected experts (the IPR Think Tank) is working closely with the United States to identify target issues for Indian policymakers. In particular, the Report expresses concerns regarding copyright infringement, patent system policies, trade secrets protection, and trademarks and counterfeiting.

With regards to copyright infringement, India has one of the highest rates of video piracy in the world, and according to a 2013 study, the number of incidents in India accounted for approximately half of all such piracy cases in the Asia-Pacific region that year. Despite the massive $4 billion dollar cost of pirated music and movies per year, India’s media and entertainment industry continue to grow and flourish; it is therefore even more imperative that India incorporate into its legal system more effective measures to counter piracy. To combat copyright infringement, the Report states that the United States has urged India to enact anti-camcording legislation, remodel its statutory license provisions, fully establish India’s Copyright Boards, and take steps to prevent public broadcasters from disseminating pirated content. The United States and India also announced important developments with respect to copyright through the 2015 Trade Policy Forum (TPF) Joint Statement, in which both countries agreed to strengthen copyright protection. The United States additionally held a workshop for a delegation of Indian government officials involved in copyright protection and enforcement, to discuss measures to curb piracy and promote content creation.

The patent system infrastructure in India also poses serious concerns for IPR protection. There is a significant backlog in the prosecution of pending patents, and Section 3(d) of the India Patents Act may limit the patentability of potentially beneficial innovations. The interpretation and application of Section 3(d) is unpredictable, and inventions that have successfully navigated prosecution in other countries can be denied patentability in India. This has been especially noticeable for inventions in software, biopharmaceuticals, agricultural chemicals, and green technologies. In 2015, India’s Ministry of Commerce and Industry issued The Patents (Amendment), Rules, 2015 (Patent Rule Amendments) in an effort to reduce delays in prosecution, however, the proposal incentivized the manufacture of products in India, going against international patent norms. The Indian government also needs to improve the conditions for which a compulsory license would be permitted, as only one compulsory license has been issued under Section 84 of India’s Patent Acts. The Report additionally urged India to provide an effective system for protection against unfair commercial use, without which companies are able to copy certain pharmaceutical products and seek immediate government approval for marketing based on the original developer’s data.

The Report also highlighted that India has not established reliable protection for trade secrets, and it is reportedly difficult to obtain compensation when these laws are violated. Additionally, India’s court system lacks sufficient procedural safeguards to protect trade secrets divulged through discovery, and there is a risk that such information may be publicly disclosed through the course of judicial proceedings. India is making efforts to improve laws that protect trade secret.

With regards to trademarks and counterfeiting, the Report noted that the level of production sale, distribution, importation, and exportation of counterfeit goods affecting India’s market remains concerning. Trademark holders face the risk of diminished profits and loss of reputation when consumers purchase fake products, and governments lose tax revenue since infringers generally pay no taxes or duties. The United States continues to express concerns about counterfeit and pirated goods produced in India and shipped to the United States.

Although India is taking steps to improve IPR protection and enforcement, the United States remains concerned about policies that appear to favor local manufacturing or Indian innovators in such a manner that damages the patent infrastructure not only in India but also around the world. Copyright and trademark infringement continue to pose a serious problem, and the unpredictable interpretation of the law provides modest legal coverage for inventors. It is encouraging that India is working to resolve these issues, however there are a number of important changes that need to be made and additional resources that need to be dedicated to strengthen IPR protection in India.

In the next post, the BRIC Wall Blog will examine in detail the Report’s findings on the state of IPR in China.

This post was written by Lisa Mueller and Caitlin MacNair.

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