USTR continues to place India on Priority Watch List

Mumbai, May 31, 2022:

The Office of the United States Trade Representative (USTR) has recently released its Special 301 Report, in which the US agency has continued to place India on the 'Priority Watch List' along with Russia, China, Indonesia, Argentina, Chile and Venezuela for lacking requisite IPR protection and enforcement.
 
The report highlighted the problematic Section 3(d) of India’s patent law, which does not allow for provision of patents for incremental innovation.
 
The Office of the USTR is the United States government agency responsible for developing and recommending United States trade policy to the President of the US, conducting trade negotiations at bilateral and multilateral levels, and coordinating trade policy within the government through the interagency Trade Policy Staff Committee (TPSC) and Trade Policy Review Group (TPRG).
 
“In the pharmaceutical sector, the United States continues to monitor the restriction on patent-eligible subject matter in Section 3(d) of the Indian Patents Act and its impacts. Pharmaceutical stakeholders also express concerns as to whether India has an effective mechanism for the early resolution of potential pharmaceutical patent disputes, particularly shortcomings in notifying interested parties of marketing approvals for follow-on pharmaceuticals, and view the further restricting in 2019 of transparency of information about manufacturing licenses issued by states as a step backward. Stakeholders also continue to raise concerns as to whether India has an effective system for protecting against the unfair commercial use, and unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products,” the report stated.
 
USTR Annual Special 301 Report identifies trade barriers to American companies, primarily due to the IP laws and legislations of other countries.
 
“India remained one of the world’s most challenging major economies with respect to protection and enforcement of IP. The potential threat of patent revocations, lack of presumption of patent validity, and the narrow patentability criteria under the Indian Patents Act impact companies across different sectors. Moreover, patent applicants continue to confront costly and time-consuming pre- and post-grant oppositions, long waiting periods to receive patent grants, and excessive reporting requirements. Stakeholders continue to express concerns over vagueness in the interpretation of the Indian Patents Act,” it said.
 
Despite India’s justifications of limiting IP protections as a way to promote access to technologies, India maintains high customs duties directed to IP-intensive products such as medical devices, pharmaceuticals etc, it added.
 
The USTR report highlighted the uncertainty faced by companies in India due to insufficient legal means to protect trade secrets. "India’s 2016 National Intellectual Property Rights Policy, which is past-due for its 5-year review, identified trade secrets as an “important area of study for future policy development.” However, as of 2022, no civil or criminal laws in India specifically address the protection of trade secrets. While India relies on contract law to provide some trade secret protection, this approach is effective only in situations where the trade secret owner and party accused of misappropriation have a contractual relationship. Criminal penalties are not expressly available for trade secret misappropriation in India, and civil remedies reportedly are difficult to obtain and do not have a deterrent-level effect," the report added.
 
USTR expressed the need for adoption of trade secret legislation in India that comprehensively addresses these concerns.
 
While India made meaningful progress to promote IP protection and enforcement in some areas over the past year, it failed to resolve recent and long-standing challenges, and it created new concerns for right holders, the report observed.
 
However, USTR has applauded abolition of the Intellectual Property Appellate Board (IPAB) and hailed the Delhi High Court for creating an Intellectual Property (IP) Division along with the Cell for Intellectual Property Rights Promotion & Management (CIPAM).
 
In July 2021, the Delhi High Court established its IP division to resolve cases related to intellectual property issues. The decision was taken based on the recommendations of a two-member committee comprising Justices Prathiba M Singh and Sanjeev Narula, which was constituted by then Chief Justice DN Patel. With similar IP Courts already functioning in the UK, Japan, Malaysia, Thailand, China etc., this step by the High Court falls in line with established global practices.
 
The report also highlighted a memorandum of understanding (MOU) signed between the US Patent & Trademark Office (USPTO) and the Ministry of Commerce and Industry's Department for Promotion of Industry and Internal Trade (DPIIT), relating to IP technical cooperation mechanisms.
 
It hailed India's accession to the World Intellectual Property Organization (WIPO) Performances and Phonograms Treaty and WIPO Copyright Treaty, collectively known as the WIPO Internet Treaties, in 2018 and the Nice Agreement in 2019.
 
Similarly, the report also lauded India’s commitment at the United States-India Trade Policy Forum (TPF) in November 2021 to comply with the WIPO Internet Treaties.
 
It hailed India for notifying Design (Amendment) Rules 2021 that reduce fees for startups seeking design protection. This will help micro, small, and medium-sized enterprises (MSMEs) play a positive role in the global economy as they contribute widely to innovation, trade, growth, investment, and competition.
 
USTR raised concern over India’s Personal Data Protection Bill and draft Non-Personal Data Governance Framework, saying that it can potentially threaten innovation and economic growth.
 
“The United States on several occasions and in various fora has raised IP concerns regarding the potential implementation of India’s data governance regime. These concerns are particularly acute given India’s outdated and insufficient legal framework for protecting trade secrets,” the report added.
 
The report stated that the US would continue to encourage India to undertake a transparent process concerning this and other potential legislation affecting IP and provide stakeholders with sufficient opportunity to comment. PhamaBiz