The 2011 Special 301 Report was issued by the Office of the United States Trade Representative (USTR) on 3rd May 2011. It is an annual review of the global state of intellectual property rights (IPR) protection and enforcement and reflects the Administration’s resolve to encourage and maintain effective IPR protection and enforcement worldwide.

It identifies a wide range of concerns, including troubling “indigenous innovation” policies that may unfairly disadvantage U.S. rights holders in China, the continuing challenges of copyright piracy over the Internet in countries such as Canada, Spain, Italy and Russia, and the ongoing, systemic IPR enforcement issues presented in many trading partners around the world.

Statutory Background on Special 301

Pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act (enacted in 1994) (“Special 301”), under Special 301 provisions, USTR must identify those countries that deny adequate and effective protection for IPR or deny fair and equitable market access for persons that rely on intellectual property protection. (“Countries” in this context include separate customs territories and the European Union). Countries that have the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on the relevant U.S. products must be designated as “Priority Foreign Countries.”

Priority Foreign Countries are potentially subject to an investigation under the Section 301 provisions of the Trade Act of 1974. USTR may not designate a country as a Priority Foreign Country if it is entering into good faith negotiations or making significant progress in bilateral or multilateral negotiations to provide adequate and effective protection of IPR.

USTR has created a “Priority Watch List” and “Watch List” under Special 301 provisions. Placement of a trading partner on the Priority Watch List or Watch List indicates that particular problems exist in that country with respect to IPR protection, enforcement, or market access for persons relying on intellectual property. Countries placed on the Priority Watch List are the focus of increased bilateral attention concerning the problem areas.

2011 Special 301 List

The 2011 Special 301 review process examined IPR protection and enforcement in 77 trading partners. Following extensive research and analysis, USTR has listed the 42 trading partners below as follows:

Priority Watch List:

Algeria, Argentina, Canada, Chile, China, India, Israel, Indonesia, Pakistan, Russia, Thailand, Venezuela.

Watch List:

Belarus, Bolivia, Brazil, Brunei, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, Finland, Greece, Guatemala, Italy, Jamaica, Kuwait, Lebanon, Malaysia, Mexico, Norway, Peru, Philippines, Romania, Spain, Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan, Vietnam.

Section 306 Monitoring: Paraguay.

The true purport of the Reports

Over the years, the Reports have assumed a predictable and repetitive character where every year those countries are named in either of the lists whose domestic laws do not confirm to the impractical and unworkable expectations of U.S. right holders seeking overseas protection of their rights.

In order to achieve this, report acts as a watch-dog for few limited people throughout the world by dictating new laws, amendments in existing laws and policies of the listed countries. It is based purely on a self-initiated exercise and does not find conformity in any of the International Conventions or treaties. The Reports depict a self-assumed task taken up by the U.S. Govt. to act as an executioner of the different International Conventions and Agreements on Intellectual Property. It may have seen been an act of bringing uniformity and order in International scenario of IP, until when few recommendations by it suggested even defying the provisions of the TRIPS agreement.

And obviously, there is no quid-pro-quo. The Reports secure the interest of U.S. rights holders but they may become burdensome if they assume the form of a pseudo International law, prescribing ‘dos and don’ts’. But nothing can be found therein prescribing anything for improvising or modifying the U.S. laws suiting right holders of other countries, thereby considering the U.S. position as the perfect case scenario.

Effectiveness of the Reports

Many suggestions made to a number of countries, contained in the 2011 Report, remain vague and unexplained. On of them is regarding adopting transparent law-making practices. It remains un-clear as to how transparent procedure for enacting law would further ‘best-practices’ in IP. Also are suggested implementation of stricter ‘deterrent-level sentences’ for IP infringement, strengthening the criminal enforcement regime, etc. The Report is mute on how these are to be implemented. The effectiveness of the Reports lies in the amount of pressure that can be built in implementing the recommendations contained therein. And History suggests fewer mechanisms than imposition of trade-sanctions in situations of non-compliance. In the midst of all this, we only hope that the growth of IP and effectiveness of IP laws throughout the world remains unhindered.