8/9/2019 How the US Shapes International Intellectual Property Policy by Nils Montan

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HOW THE US SHAPES INTERNATIONAL IP POLICY -

USTR AND THE SPECIAL 301 REPORTBy Nils Victor Montan

Essentially, the USTR is a Cabinet level appointment

in the Executive Branch of the federal government that

is responsible for the articulation and implementation

of trade policy of the United States. The USTR has a

number of responsibilities, but the protection of US

based intellectual property around the world, as a

matter of policy, is one of the most important of them.

The United States has been a driving force over the past

50 years for the international protection for intellectual

property. This makes sense from the US point of

view, as United States based intellectual property is

a tremendous resource and asset to the country. In

addition to normal bilateral relationships between the

US and its trading partners, which are often handled

by the Departments of State and Commerce, perhaps

the principle mechanism used by the United States

government to seek the protection of home-grown IP is

the USTR’s annual Special 301 Report. The 301 Report

notes any policy, law or practice by a foreign country

that is a barrier to trade for the US. The types of barriers

can be many, including lack of adequate patent and

trademark protection. Among the most problematic

areas is the issue of rampant counterfeiting and piracy of

US based products outside of the United States.

Counterfeiting and piracy have been called the “crimes

of the 21st century” by some. While that designation

may be debatable, it is not open to question that

the world is swimming in a sea of products that are

not manufactured by the legitimate owners of the

intellectual property adhering to the original goods.

There are estimates that the value of counterfeit and

pirated goods sold in the world today may be as much as

half a trillion dollars. And not just money is at stake here.

Counterfeit drugs and other products can have serious

health problems for consumers all over the world. Oneconsistent part of the USTR’s annual 301 Report is

to note the high levels of piracy and counterfeiting in

countries like China and Russia.

Of course, the 301 Report is an inherently political

document at some level and the Report has become a

thorn in the side of many countries around the world as

the US has criticized their perceived lack of protection

for US based IP. In recent years, many governments and

NGOs have criticized the entire process as being biased

and unfair. Indeed, there are some who question the

very appropriateness of protecting patents that may

prevent important drugs from getting to market, or

copyright laws which may impose prison sentences forthe downloading of music and films. At the very least,

countries hate landing on the US “black list.” Despite

the criticism, however, the 301 process continues on and

remains a virtual blueprint of US foreign policy in the IP

area.

Many legal professionals,including intellectual property

lawyers, have heard about, but

don’t really understand, the

role of the Office of the United

States Trade Representative (the

“USTR”) and the USTR’s annual

Special 301 Report.

8/9/2019 How the US Shapes International Intellectual Property Policy by Nils Montan

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the USTR conduct public hearings in early March to

provide opportunities to both supporters and critics of

the 301 Report to voice their concerns. To some, this

appeared to be a more mature discussion about the

objectives of US trade policy. To the severe critics of US

policy, it was viewed as largely window dressing.

There is a high likelihood that the work of the USTR will

become even more politicized in the years to come. It

has been felt by a number of IP rich countries that the

benchmark of an “adequate and effective” IP system

provided by the Trade Related Aspects of Intellectual

Property Rights (TRIPS Agreement) has not met its

obligation to protect IP. As a result, the United States,

along with some of its major trading partners, such

as Japan, the EU and Australia, have proposed a new

treaty, the Anticounterfeiting Trade Agreement, or ACTA.

The negotiations for ACTA have been largely held out of

the public eye, which has raised claims of inappropirate

secrecy by critics. In addition, many fear that even

stronger protection for IP around the world will have a

negative effect in the developing world. Never-the-less,

it is likely that this new standard will become widely

adopted in years to come and will provide the USTR

with an even stronger benchmark in its quest to fight for

strong international IP protection for US-based products.

 About The Author 

Nils Victor Montan is Of Counsel to the Brazilian law firm of 

Dannemann Siemsen Bigler & Ipanema Moreira. He was formerly 

the President of the International AntiCounterfeiting Coalition

in Washington, DC and Vice President and Senior Intellectual

Property Counsel at Warner Brothers in Burbank, California.

He is also a former President of the International Trademark 

 Association.

HOW THE US SHAPES INTERNATIONAL IP POLICY - USTR AND THE SPECIAL 301 REPORT

For a number of years, the People’s Republic of

China has been the focus of the 301 Report and has

been named as a Priority Foreign Country on several

occasions. This makes sense, as many IP owners see

markets all over the world awash with counterfeit and

pirate products manufactured in China. The result is

an ongoing “dance” between the US and China about

China’s intellectual property protection regime. Otherperennial occupants on the 301 Report include Brazil,

India, Korea, Indonesia and Russia. No country that

lands on the 301 list accepts the designation lying down.

Every country seeks to denounce the fairness of the

designation. This can result in open warfare in the press

or in intense negotiations between the countries. Despite

the heat, it is accepted by most observers that, in fact,

the improvement in the IP laws and practices in many

countries including China, over the past 25 years, are

due to the pressure bought on by a 301 designation and

the resulting bilateral negotiations with the US.

Interested parties begin to draft their Special 301 report

submissions to the USTR’s office in the fall, whichare normally due in early February of the following

year. Any interested party can file a petition with the

USTR listing the countries it feels are not adequately

protecting US based IP. Of course, the USTR can also

initiate an investigation of its own. In recent years, the

petitions which have received the most notice from the

USTR are those that have the most detailed information

about the facts of actual lack of protection. Important

submissions have been made by the Pharmaceutical

Research and Manufacturers of America (“Pharma”), the

International Intellectual Property Alliance (“IIPA”) and

the International AntiCounterfeiting Coalition (“IACC”).

Following a staff investigation of the facts set forth inthe submissions and further dialogue with all interested

parties, the final Special 301 Report is issued in April.

The 2009 Special 301 Report review process examined

intellectual property protection in 77 countries.

Following extensive research and analysis, the USTR

designated 46 countries in the Report as failing to

adequately protect IP. There was no Priority Foreign

Country in the report, but there were 12 Priority

Watch list countries, including China, Russia, Algeria,

Argentina, Canada, Chile, India, Indonesia, Israel,

Pakistan, Thailand and Venezuela. The reasons that each

of these countries has landed on the USTR’s “black list,”

as some choose to call it, are varied and many, but each

is alleged to have failed to protect US based IP in some

fashion.

The submissions are now at the USTR’s Washington, DC

office for the 2010 301 Report and there are no major

surprises in the filings. This year, in an effort to be more

open and transparent, the Obama Administration had

“The improvement in the IP

laws and practices in many 

countries including China, over 

the past 25 years, are due to thepressure brought on by a 301

designation.”