Emergency Committee For American Trade - Publications

Intellectual Property

Special 301

Under the Special 301 provisions contained in the Omnibus Trade and Competitiveness Act of 1988, as amended in the Uruguay Round Agreements Act of 1994, USTR is required to identify those countries that deny adequate and effective protection for intellectual property rights or deny fair and equitable market access to persons that rely on intellectual property protection. The Special 301 provisions require that countries that have the most egregious practices with the greatest adverse impact on U.S. trade must be designated as a "Priority Foreign Country." USTR is then required to initiate a Section 301 investigation of the intellectual property practices of such countries within 30 days of the annual April 30 deadline. USTR created two additional country classifications, referred to as "Priority Watch List" and "Watch List" countries," to allow the flexibility to encourage countries to improve intellectual property rights protection without having to designate a country as a "Priority Foreign Country" and initiate a Special 301 investigation.

Ambassador Barshefsky said that the results of the 1999 Special 301 Annual Review reflected the Administration’s top three priorities in the area of intellectual property rights protection: 1) ensuring proper and timely implementation of the WTO TRIPs Agreement; 2) cracking down on pirated production of optical media such as CDs, VCDs, DVDs, and CD-ROMs; and 3) ensuring that government ministries only use authorized software. In light of these objectives, the 1999 Special 301 Review identified 57 countries as lacking adequate and effective protection of intellectual property rights. Paraguay and China were designated for special monitoring under Section 306 of the Trade Act of 1974, which authorizes the USTR to impose trade sanctions if the commitments of a bilateral agreement are breached. The United States remains concerned that Paraguay has made only limited progress in improving enforcement of its copyright and trademark laws. With regard to China, the United States is concerned about end-user piracy of business software, retail piracy, trademark counterfeiting, and inadequate administrative protection for pharmaceuticals. The November 1999 WTO U.S.-China bilateral accession agreement and China’s commitment to implement the TRIPs agreement upon WTO accession will help to address these concerns.

The 1999 Special 301 Review placed 16 countries, including Israel, Ukraine, Argentina, Egypt, the Dominican Republic, the EU, Peru, Greece, and India, on the "Priority Watch List," signifying that the United States will monitor their efforts to improve their intellectual property rights protection. Piracy of music CDs, video CDs, and CD-Roms remains a serious problem in Israel, Ukraine, and the Dominican Republic. Argentina’s patent regime denies adequate and effective protection for U.S. patent owners, particularly in the pharmaceutical industry. Software piracy in Argentina is also a continuing concern. Egypt’s patent law excludes pharmaceutical products from patentability, contains overly broad compulsory licensing provisions, and does not provide a term of protection consistent with TRIPs requirements. The EU’s regulations concerning geographical indications for foodstuffs and agricultural products deny national treatment and do not provide adequate trademark protection.

A total of 37 countries including South Africa, Colombia, Poland, the Czech Republic, Korea, and Australia were placed on the "Watch List."

USTR announced that "out-of-cycle" Special 301 reviews would be conducted for Malaysia and Hong Kong in September 1999 and for Israel and Kuwait in December of 1999. USTR also stated that it would conduct a special out-of-cycle review of the TRIPs implementation of all developing countries. In December of last year, USTR announced that Colombia and the Czech Republic had failed to improve their anti-piracy enforcement and would remain on the Special 301 Watch List, and that Hong Kong and Malaysia would be kept off the Watch List in light of their progress in reducing optical media piracy. USTR has called upon Malaysia to bring its laws into conformity with the TRIPs agreement. It is critical that these reviews be completed as soon as possible.

USTR is currently considering public comments in making its Special 301 country determinations for its 2000 Special 301 Annual Review. The comments from the pharmaceutical industry urge that Argentina, Egypt, and India be identified as "Priority Foreign Countries" and that the United States immediately initiate WTO dispute settlement cases against these countries based on their continuing refusal to adopt adequate and effective patent protection for pharmaceutical products and to provide fair and equitable market access. Argentina and India are global centers of unauthorized copying of patented products on a broad commercial scale. Egypt has yet to indicate that it will enact the necessary legislation to bring itself into compliance with the TRIPs agreement. The pharmaceutical industry also requests that Korea, Hungary, Israel, Canada, and Brazil be included on the "Priority Watch List" for their failure to meet their obligations under the TRIPs Agreement by January 1, 2000. The industry urges USTR to take aggressive action against these countries, including the initiation of WTO dispute settlement.

Comments from the copyright industries urge that Israel and Ukraine be identified as "Priority Foreign Countries" for their widespread copyright piracy, particularly of optical media products. The copyright industries also urge continued monitoring under Section 306 of China and Paraguay and recommended "Priority Watch List" status for 14 countries, including Argentina, Brazil, the Czech Republic, the Dominican Republic, and Italy.

WTO Dispute Settlement

The United States has brought 13 intellectual property rights cases before the WTO since 1996. It has been successful in a number of cases in forcing WTO member countries, such as India, Portugal, Sweden, Turkey, Ireland, Greece, and the EU to move toward compliance with their obligations under the WTO TRIPs agreement. Sweden and Ireland have passed legislation to strengthen enforcement of their intellectual property laws, and Greece has enacted legislation to prevent copyright infringement by television stations.

Last May, the United States initiated WTO dispute settlement proceedings against Argentina and Canada challenging the adequacy of their patent laws, and the EU challenging its regulations governing the protection of geographical indications for agricultural products and foodstuffs.

Optical Media Products Piracy, Organized Crime and End-User Piracy of Software

The copyright industry is increasingly using a common set of media to distribute their products worldwide, including compact disc (CD), video CD, CD-ROM, and Digital Versatile Disk (DVD), known collectively as "optical media." There has been rapid growth in the capacity for producing optical media products. Much of the world excess production capacity (now estimated at twice world demand) is being used to produce pirated optical media products--such as films, music and sound recordings, and computer software (both business and entertainment) on CDs and CD-ROMs--in countries around the world, which poses a serious threat to every sector of the U.S. copyright industry. Piracy of computer software alone is estimated to cost the U.S. industry over $11 billion per year in sales, and total worldwide piracy is estimated to cause between $20 and $22 billion in losses to U.S. copyright-based companies annually. Israel, Taiwan, and Ukraine are of particular concern as producers of pirate CDs and CD-ROMs that are exported worldwide. Hong Kong, Paraguay, Macao, and Malaysia have taken steps to controlling optical media piracy, but require continued monitoring. Bulgaria has made great strides in eliminating the production of pirated optical media, and USTR has urged that its commitment to the enforcement of its intellectual property laws serve as a model for other developing countries.

Efforts to combat optical media piracy should remain an Administration priority this year. While the U.S. government should continue to pursue the elimination of optical media piracy through traditional intellectual property right enforcement mechanisms, such as Special 301, GSP, and the TRIPs agreement, because of the ease of production and distribution of pirated optical media products, these enforcement methods may be insufficient to prevent the spread of digital piracy. It is, therefore, important that the U.S. government continue to urge that these countries undertake to create a regulatory framework for licensing optical media production and tracking raw materials inputs in order to establish an effective system to deter piracy.

The Administration should also sustain its efforts to combat end-user piracy of computer software, which is the greatest single source of software piracy. In many countries, government entities are the major users of software, both legal and illegal. It is imperative that foreign governments make the issue of legal use of software a priority. USTR has made progress in convincing China, Paraguay, Colombia, the Philippines, and Jordan to issue directives mandating that government ministries use only authorized software.

Implementation of World Intellectual Property Organization (WIPO) Treaties

In December 1996, WIPO adopted the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonogram Treaty (WPPT), which provide a basic framework for minimum standards of copyright protection for the online distribution of copyrighted works. The United States implemented the two WIPO treaties under Title I of the Digital Millennium Copyright Act of 1998 and ratified them in September 1999. The 1998 Act prohibits the circumvention of technological measures that control the access to copyrighted works on computer networks and their unauthorized reproduction, as well as the importation, manufacture, or sale of devices used to circumvent such technological protections. The 1998 Act also prohibits the removal or alteration of copyright management information used to identify a work on computer networks. Civil and criminal remedies enforce these provisions, with certain exceptions for innocent violations, libraries, and educational institutions.

Digital piracy is a serious threat to global electronic commerce. The WIPO treaties are a significant step toward guaranteeing the protection of copyrighted materials on the Internet and fostering the growth of electronic commerce. Thirty countries must ratify the WIPO treaties in order for them to enter into force. It is critical that the United States press for early ratification and full implementation of the WIPO treaties in the 30 countries needed to put the treaties into force. Private sector participants in WIPO’s Industry Advisory Commission are also urging WIPO to actively encourage the harmonized implementation of the WIPO treaties.

WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs)

The TRIPs Agreement came into force on January 1, l995, with a phase-in of some obligations under the agreement, based on a country’s level of development. Developed countries were required to implement the agreement by January 1, l996; developing countries had to implement by January 1 of this year, and the least-developed countries must implement by January 1, 2006.

USTR announced last year that it would conduct a special out-of-cycle Special 301 review in order to assess the progress made by developing countries in meeting their TRIPs obligations. In January of this year, it announced the actions it would take to ensure full compliance with the TRIPs agreement. USTR initiated the out-of-cycle review in December of last year, but has yet to release the results of the review. In January of this year, a number of WTO member countries asked the WTO General Council to grant them a blanket extension of implementation deadlines for a number of WTO agreements, including the TRIPs agreement. The United States has refused to support an extension of the implementation of the TRIPs Agreement and has reserved its right to bring challenges under WTO dispute settlement procedures against countries that failed to meet the January 1, 2000 TRIPs implementation deadline. It is vital that the United States follow through with its commitment to make appropriate use of the WTO dispute settlement process against developing countries that have failed to comply with the TRIPs Agreement.

It is also important that the United States continue to oppose the reopening of the TRIPs agreement. The WTO built-in agenda already provides an active program for review of the TRIPs agreement. The agenda includes 1) the review, mandated by TRIPs article 27.3 (b), of the exclusions from patentability for certain plants and animals, 2) the review by the TRIPs Council, mandated by Article 71.1, of TRIPs implementation this year, and 3) the TRIPs Council’s review of the TRIPs agreement itself in 2002. In keeping with this built-in agenda, the focus must remain on achieving full implementation of the TRIPs Agreement.

In WTO accession negotiations, the United States must insist that acceding countries be required to implement the TRIPs agreement immediately upon accession without transition.

ECAT POSITION: ECAT supports the efforts of the Administration to secure full implementation of the TRIPs Agreement by insisting on adherence to existing transition deadlines, opposing any moratorium on dispute settlement cases, and making aggressive use of WTO dispute settlement procedures to enforce the agreement. ECAT urges the Administration to make every effort to encourage countries to ratify the WIPO copyright treaties, so that they may enter into force by the end of this year. ECAT supports the Administration’s initiative to combat piracy of optical-media products through effective enforcement and regulation, and end user software piracy, particularly by foreign governments.


	Intellectual Property Special 301 Under the Special 301 provisions contained in the Omnibus Trade and Competitiveness Act of 1988, as amended in the Uruguay Round Agreements Act of 1994, USTR is required to identify those countries that deny adequate and effective protection for intellectual property rights or deny fair and equitable market access to persons that rely on intellectual property protection. The Special 301 provisions require that countries that have the most egregious practices with the greatest adverse impact on U.S. trade must be designated as a "Priority Foreign Country." USTR is then required to initiate a Section 301 investigation of the intellectual property practices of such countries within 30 days of the annual April 30 deadline. USTR created two additional country classifications, referred to as "Priority Watch List" and "Watch List" countries," to allow the flexibility to encourage countries to improve intellectual property rights protection without having to designate a country as a "Priority Foreign Country" and initiate a Special 301 investigation. Ambassador Barshefsky said that the results of the 1999 Special 301 Annual Review reflected the Administration’s top three priorities in the area of intellectual property rights protection: 1) ensuring proper and timely implementation of the WTO TRIPs Agreement; 2) cracking down on pirated production of optical media such as CDs, VCDs, DVDs, and CD-ROMs; and 3) ensuring that government ministries only use authorized software. In light of these objectives, the 1999 Special 301 Review identified 57 countries as lacking adequate and effective protection of intellectual property rights. Paraguay and China were designated for special monitoring under Section 306 of the Trade Act of 1974, which authorizes the USTR to impose trade sanctions if the commitments of a bilateral agreement are breached. The United States remains concerned that Paraguay has made only limited progress in improving enforcement of its copyright and trademark laws. With regard to China, the United States is concerned about end-user piracy of business software, retail piracy, trademark counterfeiting, and inadequate administrative protection for pharmaceuticals. The November 1999 WTO U.S.-China bilateral accession agreement and China’s commitment to implement the TRIPs agreement upon WTO accession will help to address these concerns. The 1999 Special 301 Review placed 16 countries, including Israel, Ukraine, Argentina, Egypt, the Dominican Republic, the EU, Peru, Greece, and India, on the "Priority Watch List," signifying that the United States will monitor their efforts to improve their intellectual property rights protection. Piracy of music CDs, video CDs, and CD-Roms remains a serious problem in Israel, Ukraine, and the Dominican Republic. Argentina’s patent regime denies adequate and effective protection for U.S. patent owners, particularly in the pharmaceutical industry. Software piracy in Argentina is also a continuing concern. Egypt’s patent law excludes pharmaceutical products from patentability, contains overly broad compulsory licensing provisions, and does not provide a term of protection consistent with TRIPs requirements. The EU’s regulations concerning geographical indications for foodstuffs and agricultural products deny national treatment and do not provide adequate trademark protection. A total of 37 countries including South Africa, Colombia, Poland, the Czech Republic, Korea, and Australia were placed on the "Watch List." USTR announced that "out-of-cycle" Special 301 reviews would be conducted for Malaysia and Hong Kong in September 1999 and for Israel and Kuwait in December of 1999. USTR also stated that it would conduct a special out-of-cycle review of the TRIPs implementation of all developing countries. In December of last year, USTR announced that Colombia and the Czech Republic had failed to improve their anti-piracy enforcement and would remain on the Special 301 Watch List, and that Hong Kong and Malaysia would be kept off the Watch List in light of their progress in reducing optical media piracy. USTR has called upon Malaysia to bring its laws into conformity with the TRIPs agreement. It is critical that these reviews be completed as soon as possible. USTR is currently considering public comments in making its Special 301 country determinations for its 2000 Special 301 Annual Review. The comments from the pharmaceutical industry urge that Argentina, Egypt, and India be identified as "Priority Foreign Countries" and that the United States immediately initiate WTO dispute settlement cases against these countries based on their continuing refusal to adopt adequate and effective patent protection for pharmaceutical products and to provide fair and equitable market access. Argentina and India are global centers of unauthorized copying of patented products on a broad commercial scale. Egypt has yet to indicate that it will enact the necessary legislation to bring itself into compliance with the TRIPs agreement. The pharmaceutical industry also requests that Korea, Hungary, Israel, Canada, and Brazil be included on the "Priority Watch List" for their failure to meet their obligations under the TRIPs Agreement by January 1, 2000. The industry urges USTR to take aggressive action against these countries, including the initiation of WTO dispute settlement. Comments from the copyright industries urge that Israel and Ukraine be identified as "Priority Foreign Countries" for their widespread copyright piracy, particularly of optical media products. The copyright industries also urge continued monitoring under Section 306 of China and Paraguay and recommended "Priority Watch List" status for 14 countries, including Argentina, Brazil, the Czech Republic, the Dominican Republic, and Italy. WTO Dispute Settlement The United States has brought 13 intellectual property rights cases before the WTO since 1996. It has been successful in a number of cases in forcing WTO member countries, such as India, Portugal, Sweden, Turkey, Ireland, Greece, and the EU to move toward compliance with their obligations under the WTO TRIPs agreement. Sweden and Ireland have passed legislation to strengthen enforcement of their intellectual property laws, and Greece has enacted legislation to prevent copyright infringement by television stations. Last May, the United States initiated WTO dispute settlement proceedings against Argentina and Canada challenging the adequacy of their patent laws, and the EU challenging its regulations governing the protection of geographical indications for agricultural products and foodstuffs. Optical Media Products Piracy, Organized Crime and End-User Piracy of Software The copyright industry is increasingly using a common set of media to distribute their products worldwide, including compact disc (CD), video CD, CD-ROM, and Digital Versatile Disk (DVD), known collectively as "optical media." There has been rapid growth in the capacity for producing optical media products. Much of the world excess production capacity (now estimated at twice world demand) is being used to produce pirated optical media products--such as films, music and sound recordings, and computer software (both business and entertainment) on CDs and CD-ROMs--in countries around the world, which poses a serious threat to every sector of the U.S. copyright industry. Piracy of computer software alone is estimated to cost the U.S. industry over $11 billion per year in sales, and total worldwide piracy is estimated to cause between $20 and $22 billion in losses to U.S. copyright-based companies annually. Israel, Taiwan, and Ukraine are of particular concern as producers of pirate CDs and CD-ROMs that are exported worldwide. Hong Kong, Paraguay, Macao, and Malaysia have taken steps to controlling optical media piracy, but require continued monitoring. Bulgaria has made great strides in eliminating the production of pirated optical media, and USTR has urged that its commitment to the enforcement of its intellectual property laws serve as a model for other developing countries. Efforts to combat optical media piracy should remain an Administration priority this year. While the U.S. government should continue to pursue the elimination of optical media piracy through traditional intellectual property right enforcement mechanisms, such as Special 301, GSP, and the TRIPs agreement, because of the ease of production and distribution of pirated optical media products, these enforcement methods may be insufficient to prevent the spread of digital piracy. It is, therefore, important that the U.S. government continue to urge that these countries undertake to create a regulatory framework for licensing optical media production and tracking raw materials inputs in order to establish an effective system to deter piracy. The Administration should also sustain its efforts to combat end-user piracy of computer software, which is the greatest single source of software piracy. In many countries, government entities are the major users of software, both legal and illegal. It is imperative that foreign governments make the issue of legal use of software a priority. USTR has made progress in convincing China, Paraguay, Colombia, the Philippines, and Jordan to issue directives mandating that government ministries use only authorized software. Implementation of World Intellectual Property Organization (WIPO) Treaties In December 1996, WIPO adopted the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonogram Treaty (WPPT), which provide a basic framework for minimum standards of copyright protection for the online distribution of copyrighted works. The United States implemented the two WIPO treaties under Title I of the Digital Millennium Copyright Act of 1998 and ratified them in September 1999. The 1998 Act prohibits the circumvention of technological measures that control the access to copyrighted works on computer networks and their unauthorized reproduction, as well as the importation, manufacture, or sale of devices used to circumvent such technological protections. The 1998 Act also prohibits the removal or alteration of copyright management information used to identify a work on computer networks. Civil and criminal remedies enforce these provisions, with certain exceptions for innocent violations, libraries, and educational institutions. Digital piracy is a serious threat to global electronic commerce. The WIPO treaties are a significant step toward guaranteeing the protection of copyrighted materials on the Internet and fostering the growth of electronic commerce. Thirty countries must ratify the WIPO treaties in order for them to enter into force. It is critical that the United States press for early ratification and full implementation of the WIPO treaties in the 30 countries needed to put the treaties into force. Private sector participants in WIPO’s Industry Advisory Commission are also urging WIPO to actively encourage the harmonized implementation of the WIPO treaties. WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) The TRIPs Agreement came into force on January 1, l995, with a phase-in of some obligations under the agreement, based on a country’s level of development. Developed countries were required to implement the agreement by January 1, l996; developing countries had to implement by January 1 of this year, and the least-developed countries must implement by January 1, 2006. USTR announced last year that it would conduct a special out-of-cycle Special 301 review in order to assess the progress made by developing countries in meeting their TRIPs obligations. In January of this year, it announced the actions it would take to ensure full compliance with the TRIPs agreement. USTR initiated the out-of-cycle review in December of last year, but has yet to release the results of the review. In January of this year, a number of WTO member countries asked the WTO General Council to grant them a blanket extension of implementation deadlines for a number of WTO agreements, including the TRIPs agreement. The United States has refused to support an extension of the implementation of the TRIPs Agreement and has reserved its right to bring challenges under WTO dispute settlement procedures against countries that failed to meet the January 1, 2000 TRIPs implementation deadline. It is vital that the United States follow through with its commitment to make appropriate use of the WTO dispute settlement process against developing countries that have failed to comply with the TRIPs Agreement. It is also important that the United States continue to oppose the reopening of the TRIPs agreement. The WTO built-in agenda already provides an active program for review of the TRIPs agreement. The agenda includes 1) the review, mandated by TRIPs article 27.3 (b), of the exclusions from patentability for certain plants and animals, 2) the review by the TRIPs Council, mandated by Article 71.1, of TRIPs implementation this year, and 3) the TRIPs Council’s review of the TRIPs agreement itself in 2002. In keeping with this built-in agenda, the focus must remain on achieving full implementation of the TRIPs Agreement. In WTO accession negotiations, the United States must insist that acceding countries be required to implement the TRIPs agreement immediately upon accession without transition. ECAT POSITION: ECAT supports the efforts of the Administration to secure full implementation of the TRIPs Agreement by insisting on adherence to existing transition deadlines, opposing any moratorium on dispute settlement cases, and making aggressive use of WTO dispute settlement procedures to enforce the agreement. ECAT urges the Administration to make every effort to encourage countries to ratify the WIPO copyright treaties, so that they may enter into force by the end of this year. ECAT supports the Administration’s initiative to combat piracy of optical-media products through effective enforcement and regulation, and end user software piracy, particularly by foreign governments. ECAT - Homepage About ECAT \| Hot Issues \| ECAT Positions Press Releases \| Trade Resources \| Key Trade Votes \| Publications Steel \| CAFTA \| Search \| Members Only Copyright 1999-2002, the Emergency Committee for American Trade