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

In this 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.  Following extensive research and analysis, the Report placed eleven (11) countries on the priority watch list and twenty-three (23) on the watch list. Argentina remains on the Priority Watch List in 2016.

The Report indicates that a major challenge in Argentina is the lack of effective IPR enforcement by the national government. Argentine police do not take ex officio actions, prosecutions frequently stall, and cases may languish in excessive formalities. Furthermore, even if criminal investigations reach final judgment, sentences are not sufficient to deter future infringement.

Argentina also continues to struggle with rampant counterfeiting and piracy. The notorious La Salada market in Buenos Aires is one of the biggest open-air markets in Latin America offering counterfeit and pirated goods. The city of Buenos Aires attempted to combat increasing lawlessness in the market in 2014, but received little assistance from the national government and as such the efforts were unsuccessful. In addition, optical disc copyright piracy is widespread and internet piracy is a growing concern in the country. In several content areas internet piracy rates are approaching 100%. For example, the Argentine-run market Cuevana, which offers pirated movies and TV shows, expanded in 2015 to include a mobile streaming application. The Report also indicates a problem with widespread use of unlicensed software by both private enterprises and the Argentine government. In spite of these issues, criminal enforcement for online piracy is nearly nonexistent.

Argentina also faces a number of ongoing challenges to innovation in the agricultural, chemical, biotechnology, and pharmaceutical industries. Argentina fails to provide adequate protection against the unfair commercial use and unauthorized disclosure of undisclosed test data generated to obtain marketing approval for pharmaceutical or agricultural products. Furthermore, Argentina only provides patent protection from the date of grant of the patent and offers no provisional protection for pending patents. There is a substantial backlog of patent applications, which causes long delays in registering rights. In addition, Argentina requires that the process for the manufacture of active compounds must be reproducible and applicable on an industrial scale in order to be patentable. Resolution 283/2015, introduced in September 2015, limits the ability to patent biotechnological innovations based on living matter and natural substances, including biologics. These measures limit the ability of companies investing in Argentina to protect their IPR and appear inconsistent with international practice.

In spite of these issues, the report states that the United States is hopeful that the recently elected government of President Mauricio Macri will engage more productively to improve the protection and enforcement of IPR in Argentina, thereby creating a more attractive environment for investment and innovation.

 

Written by Lisa L. Mueller and Rikki A. Hullinger.

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

In this 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.  Following extensive research and analysis, the Report placed eleven (11) countries on the priority watch list and twenty-three (23) on the watch list. Thailand remains on the Priority Watch List in 2016.

The Report indicates that although steps have been taken to improve IPR protection and enforcement in Thailand, including the launch of the National Intellectual IP Center of Enforcement in 2013 and several legislative measures passed since 2014, these attempts have proven ineffective and unsuccessful.  For example, in 2014 the Thai government introduced several amendments to the Customs Act and Copyright Act in an attempt to decrease the volume of illegal goods transiting through the country and to diminish unauthorized cam-cording in Thai theaters.  Unfortunately, the government failed to consider concerns expressed by foreign governments on prior drafts of the amendments.  As a result, the amendments omitted a much-needed landlord liability provision, failed to provide proper enforcement against unauthorized camcording, and did not set forth adequate protections against the circumvention of technological protection measures (TPMs).

In addition to the above issues, another Copyright Act amendment designed to introduce an option for right holders to obtain a court order to force online service providers to take down infringing content has resulted in a lack of clarity in the operation of the notice-and-takedown procedures. Right holders also express concerns regarding pending legislation imposing content quota restrictions and are concerned about potential unintended effects of pending data and cyber security laws.  The Report indicates that it will be critical for Thai authorities to engage closely with foreign governments and industry to ensure that these and future legislative measures effectively improve IPR protection and enforcement in the country.

Other concerns include a backlog in pending patent applications, widespread use of unlicensed software in both the public and private sectors, growing Internet-based copyright piracy, rampant trademark counterfeiting, lengthy civil IPR proceedings and low civil damages, and extensive cable and satellite signal theft.  Furthermore, Thailand continues to struggle to provide an effective system for protecting against the unfair commercial use and unauthorized disclosure of data generated to obtain marketing approval for pharmaceutical and agricultural chemical products.

In conclusion, the Report urges Thailand to do more to prioritize IPR enforcement and to address longstanding organizational challenges in the country.

This post was written by Lisa L. Mueller and Rikki A. Hullinger, Ph.D.

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

In this 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.   After extensive research and analysis, Venezuela remains one of eleven (11) countries on the priority watch list for 2016. 

The Report indicates that the combination of Venezuela’s formal withdrawal from the Andean Community, the reinstatement of its 1956 Industrial Property Law, provisions set forth in Venezuela’s 1999 constitution, and international treaty obligations still in effect has created legal ambiguity for IPR in the country.  Venezuela’s Autonomous Intellectual Property Service (SAPI) has not issued a new patent since 2007, and has substantially increased patent filing and maintenance fees since May of 2015.  Brand owners further report that SAPI regularly approves and publishes applications for trademarks that are similar or nearly identical to registered marks, and that trademark opposition procedures that do exist to combat these issues are slow and ineffective.   Additionally, Venezuela lacks an effective system for protecting against the unfair commercial use and unauthorized disclosure of data generated to obtain marketing approval for pharmaceutical products. 

Venezuela also continues to struggle with widespread counterfeiting and online piracy.  In the past year, infringing copies of movies found to be contributing to online piracy were traced back to unauthorized camcording in Venezuelan theaters.  In spite of these problems, prosecution of IP crimes is rare and penalties in place are insufficient to deter counterfeiters.  In view of these issues, The Property Rights Alliance’s 2015 Intellectual Property Rights Index ranked Venezuela 125 of the 129 countries evaluated and the World Economic Forum’s 2015-2016 Competitiveness Report ranked Venezuela last among all 140 countries evaluated with respect to IPR protection.  Despite these consistently low rankings, Venezuela has made no effort to improve IPR in the country in 2015 and as such remains on the priority watch list for the 2016 Special 301 Report.      

This report was written by Lisa Mueller and Rikki Hullinger.

India’s Stringent and Shifting Policy on Genetically Modified Cotton Seeds

India’s Cotton Industry & Monsanto

India is the world’s second largest producer and exporter of cotton. While India produced cotton before the introduction of genetically modified seeds, Monsanto Company’s (Monsanto) Bacillus thuringiensis (Bt.) cotton technology has helped the country achieve astronomical gains in cotton production as illustrated below in Figure 1.

Figure 1: Average cotton yields in India, 1950-2010

chart 1

Monsanto’s presence in India is as Mahyco Monsanto Biotech (MMB), a 50:50 joint venture between Maharashtra Hybrid Seeds Company Private Limited (Mahyco) and Monsanto. MMB licenses two types of Bt. cotton seeds in India known as Bollard I and Bollard II, respectively. A description of these varieties is as follows:

  1. Bollgard I:
    1. Introduced in 2002, Bollgard Bt. I cotton was India’s first biotech crop technology approved for commercialization. It has built-in protection against infestations by the destructive American Bollworm, Heliothis Armigera, and contains an insecticidal protein from a naturally occurring soil organism. Use of this variety does not require the payment of a royalty fee as bollworms have developed resistance against this variety.
  2. Bollgard II:
    1. Bollgard Bt. II was approved in mid-2006. It provides protection against bollworms and Spodoptera caterpillar, which leads to better boll retention, maximum yield, lower pesticide costs, and protection against insect resistance. Use of this variety requires the payment of a royalty fee.

MMB currently licenses the Bollgard I and Bollgard II technologies to approximately 50 Indian seed companies. These seed companies have introduced the Bollgard technology into their own germplasm and manufacture over 300 different Bt. cotton hybrid seeds. As a result, MMB is the only supplier of genetically modified (GM) cotton seeds in India and more than 90% of the cotton grown employs Monsanto’s technology.

Cotton Farmers in India

Unfortunately, the rise of cotton production in India has not translated to prosperity for the country’s cotton farmers. Instead, high numbers of Indian farmers have committed suicide since 1995, with heavy indebtedness accrued from their cotton business believed to have played a role. The factors contributing to this heavy indebtedness are discussed in more detail below.

Cost of seeds

Bt. seeds can cost up to four times more than traditional varieties of seeds. Farmers purchase fresh seeds annually because the resulting hybrid cultivars contain “terminator” technology, thereby preventing farmers from replanting the seeds the following year.

Need for irrigation/wate

Bt. seeds require irrigation. Sixty-five percent of India’s cotton crop comes from farmers who rely on rain and who do not have access to irrigation. Therefore, unfavorable weather conditions acutely hurt their crops and pockets.

Need for insecticides

The bollworm was not a major pest in Indian cotton in the 1970’s but higher yielding plants produced from GM seeds have drawn more pests.  In 2010, Monsanto admitted that insects developed resistance to its Bt. I cotton seeds and that the Bt. I hybrid crops were no longer effective against the bollworms. In view of this, Monsanto has advocated that Indian farmers switch to Bt. II cotton seed technology because these varieties have a greater ability to delay insect resistance.

Critics have pointed out that insects will eventually develop resistance to the insecticide produced by  Bt. II cotton seeds. They have also noted that the toxin produced by the Bt. II cotton seed is active only for 90 days and that the bollworm is a late season pest (cotton season can last as long as 160 days). Therefore, bollworms have become problematic for cotton farmers. With the rise of industrial agriculture in India and the use of new hybrid and GM seeds, farmers have become increasingly reliant on insecticides. Unfortunately, the bollworms have evolved to become resistant to these insecticides and their natural predator populations have also declined. As a result, farmers must purchase large quantities of insecticides to harvest cotton.

Low pay for cotton farmers

Cotton farming is a low paying profession.  Not surprisingly, a dip in the global price of cotton can spell disaster for farmers. As a result, many farmers have turned to loan sharks to pay for fertilizers, insecticides, and hybrid and GM seeds. Cycles such as this have driven farmers deeper into debt and tragically to suicide.

Many of the materials needed for farming and agriculture in India are heavily subsidized or offered without cost to the farmers by the Indian government. Therefore, the purchase of insecticides and high priced GM seeds as well as the reliance on irrigation and sporadic rains ultimately drain farmers’ finances. Figure 2 below shows that over time, increased adoption of Bt. cotton correlates with an increase in number of suicides by farmers.

Figure 2: Farmer suicides in India, 1997-2006

chart 2.png

India’s Cotton Seed Regulations

The farmer suicide epidemic has resulted in the Indian government regulating prices for Bt. cotton seeds. The aim is to help decrease the financial burden of India’s cotton farmers and break MMB’s monopoly on the GM seed market.

On December 7, 2015, the Ministry of Agriculture and Farmers Welfare (“Ministry”) issued a price control order, entitled the “Cotton Seed Price (Control) Order, 2015”, to bring uniformity in GM Bt. cotton seed prices across the states in India where previously none existed. This Order was created under the section 3 of the Essential Commodities Act, 1955.

On March 8, 2016, the Ministry issued a Notification, under the Cotton Seed Price (Control) Order, 2015 which capped  GM cotton seed prices at Rs. 800 (11.90 USD) for a packet of 450 g of seeds for the financial year 2016-2017. It also reduced the royalty fees (referred to as “trait value” in the Notification) to Rs. 49 (0.73 USD) per 450 g of seeds.

Serial No.

Components Bollgard I version of Bt. cotton hybrid

Bollgard II version of Bt. cotton hybrid

1

Seed value (in rupees) 635 751

2

Trait value including taxes (in rupees)

0

49

3 Max. Sale price (in rupees) 635

800

Before the Notification, Bt. cotton seeds were sold at prices ranging from Rs. 830-1000 (12.30-14.80 USD). The royalty fee received by companies such as MMB was cut by 74% (excluding taxes) from the previous royalty fee of Rs. 163 to Rs. 43. The Ministry said that this Notification was prompted because Bt. Cotton’s ability to resist bollworm pest attacks had weakened.

On May 18, 2016, another Notification, entitled Licensing and Formats for GM Technology Agreement Guidelines, was issued under the Cotton Seed Price (Control) Order, 2015. This Notification provided tighter restrictions on GM technology providers, such as MMB. The main restrictions are:

  • GM technology providers cannot deny a license to any qualifying domestic seed company wanting to incorporate the approved GM technology into its own hybrids and varieties.
  • GM technology providers must award license for the GM technology within 30 days of receipt of a request from an eligible seed company. In the event this obligation is not met, the licensee (domestic seed company) is deemed to have obtained the license.
  • GM technology providers cannot charge royalty fees exceeding 10% of the maximum sale price, which is fixed at Rs. 800, for the first five years from the date of commercialization of the technology. After first five year period, the royalty fees are reduced by 10% of initial value every year.
  • If GM technology loses its efficacy, the GM technology provider is not eligible for any royalty fees.

Critiques of the Regulations

The Indian biotechnology industry opposed the regulations on GM technology providers. The Association of Biotechnology Led Enterprises-Agriculture Focus Group, a pro-GM advocacy group (which represents crop research companies such as Monsanto, Mahyco, Syngenta, DuPont, Pioneer, Bayer BioScience, BASF, Advanta) stated the decision would discourage companies from investing in research. Critics from the agriculture industry have called the new regulations arbitrary and innovation stifling. Opponents have criticized the regulations saying that they do not offer methodology on how the Indian government arrived at the final royalty fees, GM technology providers have little to no say on whom to give licenses, and that the aim of these regulations is to benefit one stakeholder: the domestic seed companies.

Monsanto representatives voiced that it would be difficult to justify bringing new technologies into India given the new regulations. The company also threatened to shut down its business in India.

Rescindment of the May 18, 2016 Notification

On May 24, 2016, the Central Government rescinded the notification of May 18, 2016 based on the advice of the Controller and after consulting with the Committee under the Chairmanship of Joint Secretary (Seed) and Controller, Department of Agriculture, Cooperation and Farmers Welfare which was involved in developing regulations.

After the rescindment, the Indian government laid out the May 18, 2016 Notification for 90 days  for comments and suggestions by the public before taking a final call. The decision to seek input by the public  was taken at the highest level of the Indian government because had the May 18, 2016 Notification been final, the move may have hurt foreign investment in agriculture research and discouraged the introduction of new technology in India.

This post was written by Lisa L. Mueller and Himani Nadgauda of Michael Best.

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

In this 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.   After extensive research and analysis, Chile remains one of eleven (11) countries on the priority watch list for 2016.

The Report acknowledges that Chile has made an effort to improve the state of IPR protection and enforcement within the country since 2015.  Specifically, the Report commends Chile for taking steps to reduce processing times for patents, increase IP enforcement actions, and reduce the use of unlicensed software.  However, the Report expresses serious concerns regarding longstanding IPR issues under the United States-Chile Free Trade Agreement.

Specifically, Chile lacks effective protections against unlawful circumvention of technology protection measures (TPMs) and protections for satellite signals carrying encrypted programs.  Chile also lacks an effective regime to protect against internet piracy.  The Report urges Chile to ensure that effective administrative and judicial procedures are made available to right holders and satellite and cable service providers in order to deter these unlawful behaviors.

The Report also indicates that Chile continues to struggle in the area of pharmaceutical products.  Chile lacks an effective system for expeditiously addressing patent issues related to applications for pharmaceutical products.  Furthermore, Chile fails to provide adequate protection against the unfair commercial use and unauthorized disclosure of data generated to obtain marketing approval for pharmaceutical products.

In addition to these issues, the Report urges Chile to join the Union for the Protection of New Varieties of Plants Convention (UPOV 91).

Under the Trans-Pacific Partnership Agreement (TPP), which sets strong and balanced standards for IPR protection and enforcement, Chile has committed to strengthen its IPR regime in these and other problematic areas.  As indicated in the Report, the United States stands ready to work closely with Chile in order to improve these issues.

This post was written by Lisa Mueller and Rikki Hullinger.

 

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

In this post, the BRIC Wall Blog continues to examine the Office of the United States Trade Representative (USTR) 2016 Special 301 report (Report) reviewing the state of intellectual property rights (IPR) protection and enforcement in U.S. trading partners around the world. The Report details the results of extensive research and analysis, which led to placing eleven countries on the priority watch list and twenty-three on the watch list. Brazil remains on the Watch List in 2016.   

Despite efforts to protect against online piracy, significant concerns remain over the high levels of piracy and counterfeiting in Brazil. In order to create public awareness and enact enforcement campaigns, the National Council on Combating Piracy and International Property Crimes (CNCP) was identified in past years as an effective entity for carrying out public awareness and enforcement campaigns. Unfortunately, the CNCP was underutilized and overall ineffective in 2015. In the Report, the United States urges Brazil to provide resources for intellectual property (IP) enforcement and seeks further commitments from the country on the strengthening of its IPR protection and enforcement measures. 

The Report also addresses the continued problem of significant delays in the examination of patents and trademarks, which, on average, take about eleven and three years, respectively. In early 2016, the United States-Brazil Patent Prosecution Highway pilot program was enacted to expedite the patent examination process in Brazil, specifically for inventions related to the oil and gas sector. Despite this positive step forward, there is still a duplicative review of pharmaceutical patent applications by the National Sanitary Regulatory Agency (ANVISA) which lacks transparency, exacerbates delays of patent registrations for innovative medications, and prevents patent examination by the National Institute of Intellectual Property (INPI).  

Furthermore, although there are laws and regulations in Brazil to protect veterinary and agricultural chemical products against unfair commercial use of undisclosed test data and other data generated to maintain marketing approval, these same laws and regulations do not apply to pharmaceutical products. Additionally, the Report notes that actions are being taken by INPI to invalidate or shorten the term of certain “mailbox” patents for pharmaceutical and agricultural chemical products. The Report concludes that the strengthening of IPR enforcement and protection for foreign and domestic right holders as well as expediting the examination of trademarks and patents is essential for continued innovation and investment in Brazil.  

This post was written by Lisa Mueller and Kate Merath.