USTR Puts Switzerland on Notice in new Special 301 IP Enforcement Report

Switzerland is now on the Office of the U.S. Trade Representative's lower-tier watch list for copyright and other IP rights violations, USTR said Wednesday in its annual Special 301 report on the global status of IP rights enforcement. China and India remain on USTR's mid-tier priority watch list, which includes nine other countries, because ongoing IP rights enforcement problems outweigh efforts to reform both nations' IP laws. USTR again chose not to include any countries on its higher-tier priority foreign country list.

USTR moved Ecuador and Pakistan to the lower-tier watch list from their previous place on the priority list. The office also removed Belarus, Paraguay, Tajikistan and Trinidad and Tobago from the watch list. The other countries on USTR's priority watch list are Algeria, Argentina, Chile, Indonesia, Kuwait, Russia, Thailand, Ukraine and Venezuela. USTR included 20 other countries on its lower-tier watch list: Barbados, Bolivia, Brazil, Bulgaria, Canada, Colombia, Costa Rica, the Dominican Republic, Egypt, Greece, Guatemala, Jamaica, Lebanon, Mexico, Peru, Romania, Turkey, Turkmenistan, Uzbekistan and Vietnam.

Switzerland “broadly provides high-levels” of IP rights protection in its territory and “makes important contributions” to promoting IP rights enforcement globally, but landed on the watch list because of U.S. concerns “regarding specific difficulties in Switzerland’s system of online copyright protection and enforcement,” USTR said in its report. A 2010 Swiss Federal Supreme Court decision that deprives “copyright holders in Switzerland of the means to enforce their rights against online infringers” remains in effect, making Switzerland “an increasingly popular host country for infringing websites,” USTR said. Switzerland has taken steps “in response to this serious concern, including the creation of stakeholder roundtables to develop recommendations to address these concerns and the introduction of draft copyright legislation.” But Switzerland still needs to “move forward expeditiously with concrete and effective measures that address copyright piracy in an appropriate and effective manner, including through legislation, administrative action, consumer awareness, public education, and voluntary stakeholder initiatives,” USTR said.

China “continued to pursue a broad-ranging overhaul” of its IP laws in 2015 partly in response to U.S. concerns and piloted a study of specialized IP courts, USTR said. But those efforts are “undermined by unchecked trade secret theft, market access obstacles to ICT [(information and communications technology] products raised in the name of security, measures favoring domestically owned intellectual property in the name of promoting innovation in China, rampant piracy and counterfeiting in China’s massive online and physical markets, extensive use of unlicensed software, and the supply of counterfeit goods to foreign markets,” USTR said. Surveys “continue to show that the uncertain [IP] environment is a leading concern for businesses operating in China” since IP “infringements are difficult to prevent and remediate, and may cause businesses to choose not to invest” there, USTR said.

India also remains on the priority watch list despite taking “positive steps to address or avoid further erosions” of its IP regime. USTR said. Prime Minister Narendra Modi's administration championed IP rights enforcement and initiatives that “have linked the realization of development goals” to IP protection, USTR said. India's 2015 enactment of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill “may provide an important new tool for rights holders in India to efficiently and effectively enforce their rights" in the courts, USTR said. But India hasn't addressed "long-standing and systemic deficiencies in its [IP rights] regime and has endorsed problematic policies that may leave open the door for backsliding in the future,” USTR said.

USTR retains the option to do an off-cycle review (OCR) of India if developments warrant, the office said. USTR will do OCRs for Colombia, Pakistan, Tajikistan and Spain to evaluate those countries' progress on IP rights issues. USTR's OCR of Colombia will focus on how the country's implementation of its pro-IP national development plan is progressing and will assess Colombia's commitment to the U.S.-Colombia Trade Promotion Agreement, the office said. The OCR of Pakistan will monitor the country's “ongoing progress” in its work to improve its IP laws and enforcement, which led to USTR's decision to downgrade Pakistan from the priority watch list this year, USTR said. The office said its OCR of Spain is a continuation of an existing review that began in 2013 to assess whether Spain has taken “concrete steps” to combat online content piracy.

“It is more important than ever to prevent foreign governments and competitors from ripping off" U.S. IP, U.S. Trade Representative Michael Froman told reporters Wednesday. The Special 301 report highlights the need for the White House, Congress and U.S. companies to “vigilantly monitor abuses of American [IP] rights anywhere they exist in the world,” Froman said. MPAA CEO Chris Dodd said the U.S. film and TV industry continues to face “many challenges in foreign markets that lack adequate and effective protections” for IP rights. The report “serves as an actionable moment for named countries to step up and address these problems,” said RIAA CEO Cary Sherman.

USTR's report “highlights the ongoing challenges innovators face in the global economy, more than 20 years after the creation of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights,” said U.S. Chamber of Commerce Global Intellectual Property Center Executive Vice President Mark Elliot in a statement. “But it also provides national and global policymakers with a roadmap to develop a stronger IP system throughout the world, namely through use of trade agreements such as the Trans-Pacific Partnership.” The report “also echoes concerns with countries identified by the U.S. Chamber’s International IP Index,” Elliot said. “Unfortunately, many of these markets have failed to invest in an IP-led innovation model, while others have even worked to undermine the IP system globally.”

The Special 301 report's ultimate goal “is to enhance the ability of U.S. creators to reach foreign markets, including in the evolving digital marketplace” with content that depends on strong copyright enforcement, said the International Intellectual Property Alliance in a news release. “To achieve this, these markets need world-class copyright laws; efficient copyright enforcement; sound legal structures for copyright licensing; and elimination of market-access barriers. Opening these markets is a proven means to grow U.S. exports, create good American jobs, and enhance U.S. global competitiveness.”