Emergency Committee For American Trade - Publications

Intellectual Property

WTO Agreement on Trade-Related Aspects of Intellectual Property Rights

The Agreement on Trade-Related Aspects of Intellectual Property Rights (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, 2000, and the least-developed countries must implement by January 1, 2006.

In December 1999, USTR announced 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. USTR found that while "substantial progress" was made by developing countries, there are a number of countries that are still in the process of implementing legislation and others that are much farther from implementation. USTR is continuing to work with these developing countries to assist them in implementing fully their TRIPS commitments.

From 1999 onward, 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 and other countries refused to support a blanket extension of the implementation of the TRIPs Agreement, preferring to review the issue on a case-by-case basis. Efforts to provide for greater flexibility in the TRIPs and WTO agreements continued throughout 2000 and 2001.

As discussed in Section 3, this issue was discussed as one of the implementation issues, as part of the WTO's Fourth Ministerial Conference in Doha, Qatar, but was not resolved. The TRIPs Council is to report on its progress on resolving this issue by the end of 2002. WTO members rejected, however, the U.S. push for the ability to bring nullification and impairment cases under TRIPs. The final implementation decision directs the TRIPs Council to review this issue for the Fifth WTO Ministerial Conference. Until then, WTO Members have agreed not to file nullification or so-called "non-violation" cases under TRIPs. The implementation decision also required the WTO to "put into place a mechanism for ensuring the monitoring and full implementation" of the requirement that developed countries provide incentives to encourage technology transfer to developing countries. As discussed in Section 2, WTO Members did agree to a declaration on the ability of member countries to use compulsory licensing and other measures in the event of public health emergencies.

It is 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 ongoing 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, 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 should insist that acceding countries be required to implement the TRIPs agreement immediately upon accession without transition.

WTO Dispute Settlement

The United States has brought 14 intellectual property rights cases before the WTO since 1996. It has been successful in a number of cases in compelling WTO member countries, such as India, Portugal, Sweden, Turkey, Ireland, Denmark, Greece, Ireland, 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.

In June 2001, the United States terminated its WTO dispute settlement case against Brazil that had challenged Brazil's requirement that patent owners manufacture their products in Brazil in order to maintain full patent rights. In return for terminating the case, the United States and Brazil agreed to bilateral consultations if Brazil seeks to apply a provision that would require U.S. manufacturers to manufacture their products in Brazil or permit Brazil to license local manufacturers of those products. U.S. industry remains very concerned over Brazil's treatment of intellectual property rights and continues to monitor this issue closely.

USTR has an ongoing WTO case against Argentina, but has yet to request the establishment of a panel. The United States originally challenged Argentina's failure to provide a system of exclusive marketing rights for pharmaceutical products and expanded this claim to include concerns over Argentina's failure to protect confidential test data: its denial of exclusive rights for patents; its failure to provide provisional measures, such as preliminary injunctions, to prevent infringements of patent rights; and its exclusion of certain subject matter from patentability. Consultations have continued and have resulted in some progress.

In the case of the United States' challenge to Canada's patent term, the WTO Appellate Body ruled in May 2000 that Canada's 17-year patent term was inconsistent with its TRIPs obligations. Canada implemented changes to its patent law effective July 12, 2001. had until August 2001 to comply.

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.

In the 2001 review, USTR focused on progress that had been made in resolving intellectual property disputes in the past year, particularly with Italy, Turkey, Spain, Peru, Moldova, Guatemala, Macao, Hong Kong, and Ecuador. The report also notes the successful resolution of WTO cases with Denmark, Greece and Ireland and progress toward the resolution of a WTO case with Argentina. The United States has brought 14 WTO intellectual property complaints since 1996.

The 2001 Special 301 Review identified 51 countries that deny adequate or effective protection of intellectual property rights or deny fair and equitable market access to U.S. artists and industries that rely on intellectual property.

On March 12, 2001, USTR also identified Ukraine as a Priority Foreign Country and initiated a Section 301 case as a result of its persistent failure to take significant action to prevent optical media piracy. On August 7, 2001, the United States suspended duty-free status under the Generalized System of Preferences program for imports from Ukraine and issued a list of other products that could face sanctions as a result of Ukraine's "persistent failure to curb unauthorized production of optical media products." U.S. companies estimate that this piracy has caused over $200 million in annual damages. The United States has urged Ukraine to take measures to stop piracy for two years and signed the 2000 U.S.-Ukraine Joint Action Plan to Combat Optical Media Piracy. USTR found, however, that Ukraine has failed to curtail the piracy.

Paraguay and China were once again designated for special monitoring under Section 306 of the Trade Act of 1974, which authorizes USTR to impose trade sanctions if the commitments of a bilateral agreement are breached. The United States welcomed China's progress in its anti-counterfeiting campaigns and promised continued monitoring of efforts to enforce its laws. With regard to Paraguay, the United States remains concerned about its enforcement and enactment of a TRIPs-consistent patent law.

The 2001 Special 301 Review placed 16 countries on the "Priority Watch List," signifying that the United States will monitor their efforts to improve their intellectual property rights protection: Argentina, Costa Rica, the Dominican Republic, Egypt, the EU, Hungary, India, Indonesia, Israel, Korea, Lebanon, Malaysia, the Philippines, Russia, Taiwan and Uruguay. It was also noted that while several countries were not listed on the Watch list, including Mexico, Japan, the Bahamas, Georgia, and Kyrgyz Republic, USTR would be pressing them for improved intellectual property protection.

A total of 32 countries were placed on the "Watch List" in April 2001. These countries are: Armenia, Azerbaijan, Belarus, Bolivia, Brazil, Canada, Chile, Colombia, Greece, Guatemala, Italy, Jamaica, Kazakhstan, Kuwait, Latvia, Lithuania, Macao, New Zealand, Pakistan, Peru, Poland, Romania, Saudi Arabia, Slovakia, Tajikistan, Thailand, Turkey, Turkmenistan, United Arab Emirates, Uzbekistan, Venezuela, and Vietnam.

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 (with 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. Such pirating 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. computer software 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. In its 2001 Special 301 report, USTR noted progress made by Bulgaria, China, Hong Kong, Malaysia, and Macao in implementing optical media laws and urged Russia, Thailand, Indonesia, the Philippines and Taiwan to make similar steps forward. Ukraine, Israel, and the West Bank and Gaza remain of particular concern as producers of pirate CDs and CD-ROMs that are exported worldwide.

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 countries of concern 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. Countries that have issued decrees requiring governmental use of legal software include China, Colombia, Ireland, Jordan, Paraguay, Thailand, France, the United Kingdom, Greece, Hungary, Hong Kong, Macao, Lebanon, Taiwan, Israel, Spain, and the Philippines.

Implementation of World Intellectual Property Organization Treaties

Strong intellectual property protections are essential to the promotion of further growth in the Internet and digital trade. To that end, the World Intellectual Property Organization (WIPO) adopted the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonogram Treaty (WPPT) in December 1996, 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. The WCT will enter into force on March 6, 2002 when 30 countries will have officially ratified it. As of January 2002, 28 countries have ratified the WPPT; thirty countries must ratify it prior to its entry into force.

ECAT POSITION: ECAT supports U.S. efforts 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 and to continue to promote strong intellectual property protection for digitized trade. ECAT supports efforts to combat piracy of optical-media products through effective enforcement and regulation, and to combat end-user software piracy, particularly by foreign governments.


	Intellectual Property WTO Agreement on Trade-Related Aspects of Intellectual Property Rights The Agreement on Trade-Related Aspects of Intellectual Property Rights (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, 2000, and the least-developed countries must implement by January 1, 2006. In December 1999, USTR announced 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. USTR found that while "substantial progress" was made by developing countries, there are a number of countries that are still in the process of implementing legislation and others that are much farther from implementation. USTR is continuing to work with these developing countries to assist them in implementing fully their TRIPS commitments. From 1999 onward, 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 and other countries refused to support a blanket extension of the implementation of the TRIPs Agreement, preferring to review the issue on a case-by-case basis. Efforts to provide for greater flexibility in the TRIPs and WTO agreements continued throughout 2000 and 2001. As discussed in Section 3, this issue was discussed as one of the implementation issues, as part of the WTO's Fourth Ministerial Conference in Doha, Qatar, but was not resolved. The TRIPs Council is to report on its progress on resolving this issue by the end of 2002. WTO members rejected, however, the U.S. push for the ability to bring nullification and impairment cases under TRIPs. The final implementation decision directs the TRIPs Council to review this issue for the Fifth WTO Ministerial Conference. Until then, WTO Members have agreed not to file nullification or so-called "non-violation" cases under TRIPs. The implementation decision also required the WTO to "put into place a mechanism for ensuring the monitoring and full implementation" of the requirement that developed countries provide incentives to encourage technology transfer to developing countries. As discussed in Section 2, WTO Members did agree to a declaration on the ability of member countries to use compulsory licensing and other measures in the event of public health emergencies. It is 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 ongoing 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, 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 should insist that acceding countries be required to implement the TRIPs agreement immediately upon accession without transition. WTO Dispute Settlement The United States has brought 14 intellectual property rights cases before the WTO since 1996. It has been successful in a number of cases in compelling WTO member countries, such as India, Portugal, Sweden, Turkey, Ireland, Denmark, Greece, Ireland, 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. In June 2001, the United States terminated its WTO dispute settlement case against Brazil that had challenged Brazil's requirement that patent owners manufacture their products in Brazil in order to maintain full patent rights. In return for terminating the case, the United States and Brazil agreed to bilateral consultations if Brazil seeks to apply a provision that would require U.S. manufacturers to manufacture their products in Brazil or permit Brazil to license local manufacturers of those products. U.S. industry remains very concerned over Brazil's treatment of intellectual property rights and continues to monitor this issue closely. USTR has an ongoing WTO case against Argentina, but has yet to request the establishment of a panel. The United States originally challenged Argentina's failure to provide a system of exclusive marketing rights for pharmaceutical products and expanded this claim to include concerns over Argentina's failure to protect confidential test data: its denial of exclusive rights for patents; its failure to provide provisional measures, such as preliminary injunctions, to prevent infringements of patent rights; and its exclusion of certain subject matter from patentability. Consultations have continued and have resulted in some progress. In the case of the United States' challenge to Canada's patent term, the WTO Appellate Body ruled in May 2000 that Canada's 17-year patent term was inconsistent with its TRIPs obligations. Canada implemented changes to its patent law effective July 12, 2001. had until August 2001 to comply. 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. In the 2001 review, USTR focused on progress that had been made in resolving intellectual property disputes in the past year, particularly with Italy, Turkey, Spain, Peru, Moldova, Guatemala, Macao, Hong Kong, and Ecuador. The report also notes the successful resolution of WTO cases with Denmark, Greece and Ireland and progress toward the resolution of a WTO case with Argentina. The United States has brought 14 WTO intellectual property complaints since 1996. The 2001 Special 301 Review identified 51 countries that deny adequate or effective protection of intellectual property rights or deny fair and equitable market access to U.S. artists and industries that rely on intellectual property. On March 12, 2001, USTR also identified Ukraine as a Priority Foreign Country and initiated a Section 301 case as a result of its persistent failure to take significant action to prevent optical media piracy. On August 7, 2001, the United States suspended duty-free status under the Generalized System of Preferences program for imports from Ukraine and issued a list of other products that could face sanctions as a result of Ukraine's "persistent failure to curb unauthorized production of optical media products." U.S. companies estimate that this piracy has caused over $200 million in annual damages. The United States has urged Ukraine to take measures to stop piracy for two years and signed the 2000 U.S.-Ukraine Joint Action Plan to Combat Optical Media Piracy. USTR found, however, that Ukraine has failed to curtail the piracy. Paraguay and China were once again designated for special monitoring under Section 306 of the Trade Act of 1974, which authorizes USTR to impose trade sanctions if the commitments of a bilateral agreement are breached. The United States welcomed China's progress in its anti-counterfeiting campaigns and promised continued monitoring of efforts to enforce its laws. With regard to Paraguay, the United States remains concerned about its enforcement and enactment of a TRIPs-consistent patent law. The 2001 Special 301 Review placed 16 countries on the "Priority Watch List," signifying that the United States will monitor their efforts to improve their intellectual property rights protection: Argentina, Costa Rica, the Dominican Republic, Egypt, the EU, Hungary, India, Indonesia, Israel, Korea, Lebanon, Malaysia, the Philippines, Russia, Taiwan and Uruguay. It was also noted that while several countries were not listed on the Watch list, including Mexico, Japan, the Bahamas, Georgia, and Kyrgyz Republic, USTR would be pressing them for improved intellectual property protection. A total of 32 countries were placed on the "Watch List" in April 2001. These countries are: Armenia, Azerbaijan, Belarus, Bolivia, Brazil, Canada, Chile, Colombia, Greece, Guatemala, Italy, Jamaica, Kazakhstan, Kuwait, Latvia, Lithuania, Macao, New Zealand, Pakistan, Peru, Poland, Romania, Saudi Arabia, Slovakia, Tajikistan, Thailand, Turkey, Turkmenistan, United Arab Emirates, Uzbekistan, Venezuela, and Vietnam. 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 (with 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. Such pirating 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. computer software 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. In its 2001 Special 301 report, USTR noted progress made by Bulgaria, China, Hong Kong, Malaysia, and Macao in implementing optical media laws and urged Russia, Thailand, Indonesia, the Philippines and Taiwan to make similar steps forward. Ukraine, Israel, and the West Bank and Gaza remain of particular concern as producers of pirate CDs and CD-ROMs that are exported worldwide. 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 countries of concern 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. Countries that have issued decrees requiring governmental use of legal software include China, Colombia, Ireland, Jordan, Paraguay, Thailand, France, the United Kingdom, Greece, Hungary, Hong Kong, Macao, Lebanon, Taiwan, Israel, Spain, and the Philippines. Implementation of World Intellectual Property Organization Treaties Strong intellectual property protections are essential to the promotion of further growth in the Internet and digital trade. To that end, the World Intellectual Property Organization (WIPO) adopted the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonogram Treaty (WPPT) in December 1996, 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. The WCT will enter into force on March 6, 2002 when 30 countries will have officially ratified it. As of January 2002, 28 countries have ratified the WPPT; thirty countries must ratify it prior to its entry into force. ECAT POSITION: ECAT supports U.S. efforts 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 and to continue to promote strong intellectual property protection for digitized trade. ECAT supports efforts to combat piracy of optical-media products through effective enforcement and regulation, and to combat end-user software piracy, particularly by foreign governments. 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